Jason and Larissa would like to have a monthly living expense covered ratio (basic liquidity ratio) of 3. They currently have $2,800 in their account and their annual expenses are $54,000. How much more do they need in their account to reach their goal?

Question

Business

Alannah Gilmore

6 August, 03:35

Jason and Larissa would like to have a monthly living expense covered ratio (basic liquidity ratio) of 3. They currently have $2,800 in their account and their annual expenses are $54,000. How much more do they need in their account to reach their goal?

+4

Answers (1)

Know the Answer?

Irvin Smith · Answer 1

They need more $10,700 in their account to reach their goal.

Explanation:

Current Account Balance = $2,800

Expenses = $54,000 per year = 54,000 / 12 = $4,500 per month

Coverage Ratio = 3

Coverage ratio = Balance in account / Monthly Expense

3 = Balance in account / $4,500

Balance in account = 4,500 x 3

Balance in account = $13,500

More amount required to reach the goal = $13,500 - $2,800 = $10,700