NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Introduction to Personal Financial Planning
Meera has liquid assets of Rs 1,20,000, monthly essential expenses of Rs 30,000 and total monthly loan EMIs of Rs 20,000. Her liquidity ratio, measured as liquid assets to monthly non-discretionary cash outflows (expenses plus EMIs), is closest to:
The liquidity ratio is 2.4 months. Liquid assets of Rs 1,20,000 are divided by monthly non-discretionary outflows of Rs 50,000, being Rs 30,000 expenses plus Rs 20,000 EMIs. Using expenses alone would wrongly give 4 months.
- A2.4 monthsCorrect
- B4.0 months
- C6.0 months
- D1.0 month
Explanation
Non-discretionary outflows = 30,000 + 20,000 = Rs 50,000. Ratio = 1,20,000 / 50,000 = 2.4 months. Dividing by expenses alone gives 4.0, which ignores EMIs and is wrong.
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