EBU 1063 Smart Money Management LECTURE 2 Quiz

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16 Questions

What is the purpose of using a balance sheet in financial management?

To evaluate your financial health

How is net worth calculated using a balance sheet?

Assets minus liabilities

What are considered as assets in financial management?

Possessions regardless of debts associated with them

What is the main focus of developing a financial plan or budget?

Achieving a specific level of savings

When evaluating your financial health, what does a professional financial planner help with?

Providing guidance on financial matters

In the context of evaluating financial health, what does the phrase 'Where does all your money go' emphasize?

The importance of budgeting and planning

What is the formula for calculating net worth?

Total assets - total debt

Which of the following is considered a liability?

Insurance policy loans

What does a negative net worth indicate?

Insolvency

How is the current ratio calculated?

(Current assets - current liabilities) / current liabilities

What is the aim for the month's living expenses covered ratio?

3 to 6 months of liquid assets

What is the purpose of the savings ratio?

To measure effective saving habits

What does a debt ratio greater than 1 indicate?

Excessive debt relative to assets

What does a long-term debt coverage ratio less than 2.5 indicate?

High financial risk

Why is record-keeping important for financial management?

To track expenses and understand spending habits

What do financial ratios help individuals with?

Analyzing raw data and comparing it to targets

Test your knowledge on calculating net worth, analyzing income and expenditures, using financial ratios, and setting up a financial plan or budget. This quiz covers the topics discussed in Lecture 2: Getting your finances in order.

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