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

Meera has total assets of Rs 80 lakh and total liabilities of Rs 20 lakh. Her gross annual income is Rs 18 lakh and she saves Rs 3.6 lakh a year. Which of the following is correct?

Net worth is assets minus liabilities, which is Rs 60 lakh, and the savings ratio is savings divided by gross income, which is 3.6 lakh over 18 lakh, or 20%. Therefore the option with Rs 60 lakh and 20% is correct.

  1. ANet worth is Rs 60 lakh and savings ratio is 20%Correct
  2. BNet worth is Rs 60 lakh and savings ratio is 25%
  3. CNet worth is Rs 100 lakh and savings ratio is 20%
  4. DNet worth is Rs 80 lakh and savings ratio is 2%

Explanation

Net worth = 80 - 20 = Rs 60 lakh. Savings ratio = 3.6 / 18 = 20%. Adding liabilities to assets gives 100 lakh, which is wrong. A 25% ratio would result from dividing by 14.4 lakh, which is not her income.

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