Formulas

Question 1

What is the formula for Savings Rate?

Answer 1

Savings Rate = (Savings + Employer Match) / Gross Income

Question 2

What is the formula for Net Worth?

Answer 2

Net Worth = Assets - Liabilities

Question 3

What is the formula for Current Ratio?

Answer 3

Current Ratio = Cash and Cash Equivalents / Current Liabilities

Question 4

What is the formula for Emergency Fund Ratio?

Answer 4

Emergency Fund Ratio = Cash and Cash Equivalents / Monthly Nondiscretionary Cash Flows

Question 5

What is Housing Ratio 1?

Answer 5

Housing Ratio 1 = Basic Housing Costs / Gross Pay

Question 6

What is Housing Ratio 2?

Answer 6

Housing Ratio 2 = (Basic Housing Costs + Debt Payments) / Gross Pay

Question 7

What does ROA stand for?

Answer 7

Return on Assets

Question 8

What is the formula for ROA?

Answer 8

ROA = (End of Year Assets - (Beginning of Year Assets + Savings)) / Beginning of Year Assets

Question 9

What does ROI stand for?

Answer 9

Return on Investment

Question 10

What is the formula for ROI?

Answer 10

ROI = (End of Year Investments - (Beginning of Year Investments + Savings)) / Beginning of Year Investments

Question 11

What is the formula for Investment Assets to Gross Pay Ratio?

Answer 11

Investment Assets to Gross Pay Ratio = (Investment Assets + Cash and Cash Equivalents) / Gross Pay

Question 12

What is the formula for Real Rate of Return?

Answer 12

Real Rate of Return = (1 + Nominal Rate) / (1 + Inflation Rate) - 1