Cash Management Analysis Sample Plan

Alex & Lois Smart (2011) This report provides an analysis of the major factors associated with Alex & Lois Smart’s cash management over the next 5 years.

CASH FLOW: The following is a summary of Alex & Lois Smart’s cash flow over the next 5 years:

Year 2011 2012 2013 2014 2015

Start of Year Surplus/Deficit $0 $24,176 $29,176 $31,676 $31,676

Current Year Surplus/Deficit +$24,176 +$5,000 +$2,500 $0 -$30,000

End of Year Surplus/Deficit $24,176 $29,176 $31,676 $31,676 $1,676

The table listed above indicates that The Smart’s cash flow is sufficient to meet their needs over the next five years. They have surplus cash in three of the next five years. Their net worth may be improved by directing these surpluses to additional savings and investments.

Important: The calculations or other information generated by NaviPlan® version 12.0 regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. These calculations are shown for illustrative purposes only because they utilize return data that may not include fees or operating expenses, and are not available for investment. If included, fees and other operating expenses would materially reduce these calculations.

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EMERGENCY FUND: The following is a summary of assets that are linked to Alex & Lois Smart’s emergency fund goal as of the start of the year:

Asset Name Savings

Asset Type Money Market

Start of Year Market Value $55,000

The Smart’s require an emergency fund of $50,190. They currently have $55,000 linked to their emergency fund goal, which they can access in the case of a financial emergency. Their emergency fund as of the start of the year is therefore sufficient to meet their needs. They should, however, monitor this fund on a regular basis to ensure that it is not depleted below their requirements in case of an emergency.

Important: The calculations or other information generated by NaviPlan® version 12.0 regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. These calculations are shown for illustrative purposes only because they utilize return data that may not include fees or operating expenses, and are not available for investment. If included, fees and other operating expenses would materially reduce these calculations.

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SAVINGS & INVESTMENTS: The higher the ratio, the more you are saving and investing and ultimately reaching your financial goals. On average, most Americans are in the 2-4% ratio category.

The following is a summary of Alex & Lois Smart’s accumulations over the next 5 years:

Year 2011 2012 2013 2014 2015

Total Savings

Investment Loan

Gross Income and Investments

Principal Payments $0 $0 $0 $0 $0

$142,000 $146,260 $150,648 $155,167 $159,822

$17,500 $18,000 $22,000 $25,000 $30,000

Ratio 12.3% 12.3% 14.6% 16.0% 18.7%

Note: We recommend a regular savings plan of approximately $17,500 annually, or $1,458 per month to meet Alex’s retirement goal of retiring in 2016. According to our analysis The Smart’s are meeting their savings and investment objectives in 5 of the next 5 years.

Important: The calculations or other information generated by NaviPlan® version 12.0 regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. These calculations are shown for illustrative purposes only because they utilize return data that may not include fees or operating expenses, and are not available for investment. If included, fees and other operating expenses would materially reduce these calculations.

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DEBT-SERVICE RATIO: Gross Income divided by Loan Payments. Debt Service Ratio is a vital measurement to monitor annually. It’s especially important when applying for a mortgage or other loans.

The following is a summary of Alex & Lois Smart’s debt service ratio over the next 5 years:

Year 2011 2012 2013 2014 2015

Gross Income $142,000 $146,260 $150,648 $155,167 $159,822

Investment

Lifestyle

Debt Service

Loan Payments $0 $0 $0 $0 $0

Loan Payments $13,860 $13,860 $13,860 $13,860 $13,860

Ratio 9.7% 9.4% 9.2% 8.9% 8.6%

The Smart’s debt service ratio over the next 5 years is well within the recommended limits. They should review this ratio any time their income or debt load changes significantly.

Important: The calculations or other information generated by NaviPlan® version 12.0 regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. These calculations are shown for illustrative purposes only because they utilize return data that may not include fees or operating expenses, and are not available for investment. If included, fees and other operating expenses would materially reduce these calculations.

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DEBT-EQUITY RATIO: Total Net-Worth Divided by Total Liabilities. Debt-Equity Ratio is also a vital measurement to monitor annually. It’s equally important when applying for a mortgage or other loans as well as establishing a retirement income strategy.

The following is a summary of Alex & Lois Smart’s debt-equity ratio over the next 5 years:

Total

Total

Debt-Equity

Net Worth

Liabilities

Ratio

2011

$1,263,360

$198,705

15.7%

2012

$1,368,227

$194,689

14.2%

2013

$1,381,204

$190,468

13.8%

2014

$1,398,961

$186,031

13.3%

2015

$1,409,750

$181,366

12.9%

Year

The Smart’s debt-equity ratio over the next 5 years is within the recommended limits. They should review this ratio any time their assets or debt load changes significantly.

Important: The calculations or other information generated by NaviPlan® version 12.0 regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. These calculations are shown for illustrative purposes only because they utilize return data that may not include fees or operating expenses, and are not available for investment. If included, fees and other operating expenses would materially reduce these calculations.

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