BFF3111 Chapter Notes - Chapter Cash Flow and Debt Management: Cash Flow, Debt Service Ratio, Effective Interest Rate
26 Jul 2018
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Document Summary
Personal financial statements provide important information required in the personal financial planning process. The balance sheet describes your financial position at one point in time, while the cash-flow statement measures cash-flow performance over a given time period. These statements allow you to track and monitor your financial progress so you can set realistic goals and meet them. A household"s net worth can be calculated from the personal balance sheet by subtracting the total value of the household"s personal liabilities from their total personal assets. A positive net worth will arise where total personal assets exceed liabilities and is the preferred outcome for the household. The cash-flow statement captures the various cash-flow activities that have occurred over time, normally over the course of a month or a year. In personal financial planning, the statement permits comparison of actual results to the budget"s values. Its components are cash inflows and outflows, and cash surplus (or deficit).
