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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Evaluating the Financial Position of Clients

Meera has assets of Rs 80 lakh (including a home worth Rs 50 lakh) and liabilities of Rs 20 lakh. Her liquid assets are Rs 6 lakh and her monthly non-discretionary expenses are Rs 50,000. Which statement is correct?

Net worth equals assets of Rs 80 lakh minus liabilities of Rs 20 lakh, which is Rs 60 lakh. Liquidity ratio equals Rs 6 lakh divided by Rs 50,000 monthly expenses, giving 12 months. Hence net worth Rs 60 lakh and 12 months is correct.

  1. ANet worth is Rs 60 lakh and liquidity ratio is 12 monthsCorrect
  2. BNet worth is Rs 60 lakh and solvency ratio is 25%
  3. CNet worth is Rs 30 lakh and liquidity ratio is 12 months
  4. DNet worth is Rs 60 lakh and liquidity ratio is 6 months

Explanation

Net worth = 80 - 20 = Rs 60 lakh. Liquidity ratio = 6,00,000/50,000 = 12 months. Solvency ratio would be 60/80 = 75%, so the 25% option is wrong. Net worth of 30 lakh wrongly deducts the home.

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