Life Cycle Stages Essay

at that place be four portrays in the fiscal life steering wheel of an individual. The accumulation, saving, pre-retirement and retirement grades. sagacity from the financial ratios of Winston and Yvonne, we concluded that Winston and Yvonne atomic number 18 in coiffure 2 the nest egg stage of the financial life cycle phase. This stage of the life cycle is usually characterized by the increase of assets, clear outlay and the pedigree in the use of debts, as by this stage Winston and Yvonne have already store more than assets over the years and would hear to protect their wealth and priorities and at the akin time seek to be more risk adverse than before. People in this stage are usually refer in saving for the future wish childrens education, retirement etc. As the nest egg Ratio can be easily explained by the amount of specie a person saves as a percentage of their total income. The level of savings as a percentage of Winstons and Yvonnes income is 60.41% as reckon is evaluate of the couple in their mid 30s travel in this stage of the life cycle as it portrayed graduate(prenominal) savings planning for the future of their childrens education. In the savings stage of the life cycle, we could anticipate an increase in gelt deserving and assets as those had been accumulated before arriver conservation phases in that cycle.The increase in assets meant that Winston and Yvonne have a relatively uplifted net expensey as calculated at 74.51%. As Winston and Yvonne have a relatively high net worth ratio, their financial solvency is lower as almost of their funds are being tied(p) up with their fixed assets and their high net worth ratio also showed that their investments and commitments are being funded by debts and trade pay fitteds that are non proportionate. Winston and Yvonne index also salute problems such as liquidity problems as their high ratio meant that they do non have immediate access to their cash. and then any decl ine in appraise of their investments or in any grammatical construction that is relevant to their assets would cause them to have the inability to pay back their debt, thus pencil lead to bankruptcy. Winston and Yvonne should seek to lower their net worth ratio by diversifying their funds in lesser fixed assets like property, foundation contents and education funds as lowering the ratio of their net worth would help them have more financial flexibility and ability to meet their financial payment obligations. http//smallbusiness.chron.com/interpret-assetstonetworth-ratios-57281.html. http//www.accountingtools.com/net-worth-ratio.As Winston and Yvonne are in their wealth protection phase, we explained that there would be an indication of a high net worth and a decrease in the use of debts. The debt Service ratio is the periodical debt commitments in comparison to total income and verbalised in a percentage. In former(a) words it is the ratio of the ability to refund brings ov er a period of time. If a debt serve ratio is too high it would mean that one is too exceedingly leveraged and has a high amount of bestow and in the considerable run might run into difficulties in repaying off the loan commitment in the future. In this stage we expected financial prudence and a high risk adversity. The low debt profit ratio of Winston and Yvonne at 14.21% indicated the low reliableness on debt and increases their ability to service their debt, reduction the risk of them not being able to continue going in the long run. This could be expected of them as they are seeking to save for the future and sack up sure that they are able to service their liabilities in the long run and not exhausted halfway through by limiting their commitments and slowly getting a debt free approach when it comes to their retirement. http//www.e-conomic.co.uk/accountingsystem/glossary/debt-ratio.