FREE Certified Trust and Financial Advisor MCQ Questions and Answers
What is a budget control schedule?
A budget control schedule is a summary that identifies where there are variations (surplus or deficit) between actual income and expenses and the major budget categories.
The relative amount of cash surplus achieved during a given period is shown by dividing cash surplus by net income (after taxes) as follows:
Total savings are divided by gross income, and the resulting number is multiplied by 100 to get the savings ratio as a percentage. When the savings ratio is higher, more of the income is being saved, whereas when the ratio is lower, more of the money is being used for consumption.
The ability to pay off debts on time is indicated by the total monthly loan payments divided by the gross (before-tax) income for the previous month.
The ratio of your debt load to your income is being compared. Or, how much of your salary will go toward paying down your debt.
An excess of spending over revenue that results in both insufficient finances and a decline in net worth is known as:
When a negative value surpasses the corresponding positive value, there is a deficit. It is frequently employed in financial contexts. For instance, a corporation may experience a deficit if its liabilities exceed its assets or its obligations exceed its turnover.
The ability to pay current debts is calculated by dividing total liquid assets by total current liabilities. It is:
When determining whether a debtor will be able to pay off their short-term debt with the cash they now have on hand or whether they will need to seek more capital to meet the amount, a liquidity ratio is utilized.
Total net worth divided by total assets determines how vulnerable a company is to bankruptcy:
Prospective business lenders frequently utilize a solvency ratio as a significant indicator of a company's capacity to repay its long-term debt. A company's financial health can be assessed by looking at its solvency ratio, which determines if its cash flow is sufficient to cover its long-term obligations.
A cash budget is a helpful tool for money management, EXCEPT:
A cash budget is not the helpful financial planning instrument that enables you to enhance your savings and investment allocations.