ANALYSIS OF PERSONAL FINANCIAL STATEMENTS

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ANALYSIS OF PERSONAL FINANCIAL STATEMENTS
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ANALYSIS OF PERSONAL FINANCIAL STATEMENTS

• Purposes of Analysis
• Dimensions of Financial Performance
• Strengths/Weaknesses/Benchmark Analysis
• Ratio Analysis

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EXPENDITURE NORMS
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• Household Debt Levels as a Percentage of Income
• Medians
• Income 1989 1992 1995
• All Households 16.0 16.4 16.4
• lt 10,000 22.9 20.0 16.7
• 10-25,000 17.3 15.8 17.5
• 25-50,000 16.4 16.6 16.9
• 50-100,000 16.1 16.9 16.7
• gt 100,000 13.6 14.8 11.1
• Source Federal Reserve Bank of Chicago, November
  1997

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ASSESSMENT OF FINANCIAL PERFORMANCE

• Liquidity
• Goal
• Asset Allocation
• Goal
• Cash flow
• Goal
• Indebtedness
• Goal
• Tax Efficiency
• Goal
• Wealth Accumulation
• Goal

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DIMENSIONS OF FINANCIAL PERFORMANCE

• Liquidity
• Current ratio
• Cash ratio
• Liquidity - total
• Liquidity - fixed
• Asset Allocation
• Current net worth
• Investment assets-to-net worth
• Return on investments
• Portfolio gain/loss

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DIMENSIONS OF FINANCIAL PERFORMANCE

• Cash flow/Ability to save
• Ability to save
• Fixed expense ratio
• Total expense ratio
• Consumption-to-income
• Indebtedness
• Housing expense ratio
• Nonmortgage debt ratio
• Credit card debt ratio
• Total debt service ratio
• Median Survey Values from Greninger, et al.
• Benchmark from Lytton, et al.

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DIMENSIONS OF FINANCIAL PERFORMANCE

• Tax Efficiency
• Marginal (federal) income tax rate
• Average (combined) income tax rate
• Govt tax burden
• Wealth Accumulation/Inflation Protection
• change in net worth from previous period
• change in net worth/inflation rate
• Average annually compounded growth of net worth
  (over n periods)

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DIMENSIONS OF FINANCIAL PERFORMANCE

• Client factors
• Client age(s) and family status
• Economic classification/income group
• Level of job security
• Marketability/level of human capital
• Family wealth
• Future employment/family plans