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

Sunita, 40, has a net worth of Rs 90 lakh, of which Rs 30 lakh is a self-occupied house. She has total assets of Rs 1.2 crore, annual gross income of Rs 24 lakh and annual savings of Rs 6 lakh. She also has Rs 12 lakh invested in financial assets. Which computed figure is correct?

Solvency ratio is net worth of Rs 90 lakh divided by total assets of Rs 1.2 crore, which is 75%. Savings ratio is Rs 6 lakh divided by Rs 24 lakh income, which is 25%. So 75% and 25% is correct.

  1. ASolvency ratio 75% and savings ratio 25%Correct
  2. BSolvency ratio 75% and savings ratio 20%
  3. CSolvency ratio 90% and savings ratio 25%
  4. DSolvency ratio 25% and savings ratio 25%

Explanation

Solvency ratio = net worth/total assets = 90/120 = 75%. Savings ratio = 6/24 = 25%. The 20% figure uses a wrong base, and 25% solvency would be the liabilities-to-assets ratio (30/120).

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