Evaluating the financial position of clients: Financial position of clients can be ascertained through some important ratios. The ability of an individual or household to handle its current and future requirements and expenses is referred to as the individual or household’s personal financial status. These funds can originate from a business or profession, or they could be accumulated over time by prudent saving and investing of a percentage of one’s salary. Our financial planning helps us allocate available current income between urgent expenses and saves for the future, and assets are typically produced to cover future household expenses. Borrowers take loans when their income isn’t enough to cover all of their obligations, such as paying down debt or purchasing assets. As a result, the household now has a debt that must be paid off in the future with income. Income, expenses, assets, and obligations all play a role in determining a household’s financial status.

A financial strategy would be incomplete without consideration of insurance planning. Insurance is a good strategy to protect your family’s finances in the event of a loss of income or a major, unanticipated expense.

In the same way that analysts use numerous ratios to evaluate the financial status of firms, we utilize several personal finance ratios to evaluate the financial position of our clients. For each client, the following metrics are used to create a ratio that shows how much money they have coming in relative to how much they’re spending, saving, and investing. As a result, personal finance ratios are an essential part of the financial planning process.

  1. Savings Ratio and Expenses ratio.
  2. Total Assets and Total Liabilities.
  3. Leverage ratio.
  4. Net Worth.
  5. Solvency ratio
  6. Liquidity ratio
  7. Financial Assets ratio.
  8. Debt to Income ratio
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