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25 February, 08:28

Mike and Mary Jane Lee have a yearly income of $71 comma 128 and own a house worth $109 comma 000 , two cars worth a total of $ 19 comma 286 and furniture worth $9 comma 679. The house has a mortgage of $56 comma 936 and the cars have outstanding loans of $2 comma 538 each. Utility bills, totaling $170 for this month, have not been paid. Calculate the debt ratio for the Lee household.

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  1. 25 February, 12:22
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    Debt ratio for the Lee household = Total Liabilities / Total Monthly Income

    = 2,538 + 2,538 + 170 + 56936 / 71,128 / 12 = 62,182/5927 = 10.49

    In other words Mike and Mary Jane Lee have a monthly Debt ratio of 1049 %

    Which is very high

    Debt ratio for the Lee household = Total Liabilities / Total Yearly Income

    = 2,538 + 2,538 + 170 + 56936 / 71,128 = 62,182/71,128 = 0.87

    there are number of ways of calculating Debt ratios.

    In other words Mike and Mary Jane Lee have a yearly Debt ratio of 87%
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