SOCSCI 2PF3 Lecture Notes - Lecture 2: Financial Statement, Financial Plan, Employee Benefits

• School: McMaster University
• Department: Social Sciences
• Course: SOCSCI 2PF3
• Professor: Tony Belsito

Document Summary

Chapter 2 your financial statements and plans. Financial planning facilitates: greater wealth, financial security, attainment of financial goals. Employee benefits choices (flexible benefit cafeteria plans: pick and choose what benefits you want! ***time value of money: putting a dollar value on financial goals. A dollar today is worth more than a dollar received in the future b/c it can be invested and earn interest. A statement of your financial position at 1 point in time. If your net worth is positive = you are solvent (have enough $ to cover obligations) If your net worth is negative = you are insolvent. A measure of financial performance over a given time period. Total income total expenses = cash surplus or deficit. Financial ratios allow you to: track progress toward your financial goals, evaluate your financial performance over a period of time. Solvency ratios: total net worth / total assets. Liquidity ratios: liquid assets / total current debts.