The couple requests that you analyse their current and future financial situation
Subject: Business / Finance
The couple requests that you analyse their current and future financial situation based on the
above information and provide some suggestions on how they could improve their long-term
net wealth. The couple are not sure what their financial situation will be once Lorrie resigns
although they realise it will be a struggle. Specifically, they require a report which considers
1. A cash flow statement for the financial years ending 30 June 2012 and a forecasted
cash flow statement for the year ending 2013, including tax calculations (use current
tax rates for both years and ignore flood levy).
2. A balance sheet as at 30 June 2012 and a forecasted balance sheet at 2013.
3. A consideration of whether the couple’s accumulated superannuation is likely to
provide them with the level of income they require at retirement that will last them
for the rest of their lives?
(i) You are required to provide a spreadsheet of accumulated superannuation for
each year to 2030.
(ii) Based on these calculations, you are then to determine what income the
couple’s accumulated superannuation is likely to provide them in retirement
(PMT calculation) and compare this with the level of “real” income that the
couple would like to receive in retirement (see client objectives).
Note- the couple’s required income in retirement should be expressed in 2030
(iii) The couple has also asked you to determine, based upon the level of real
income they require in retirement, what they would need to accumulate in
their combined superannuation accounts at the time of retiring. (PV of an
Note – In the retirement income calculations that you perform, the number of years
the couple are likely to live should be based on Australian life expectancy tables
which can be accessed from the following link. Life expectancy should be
determined at the time of the couple’s retirement.
4. Critically analyse the financial situation of Larry and Lorrie based on the information
provided and discuss the ramifications of Lorrie leaving her employment.
As well as providing an overall analysis, you are also required to include a
calculation and discussion of relevant financial ratios (i.e. net worth, liquidity,
savings and debt service) for both 2012 and 2013 to illustrate and identify potential
5. Briefly describe three possible strategies on how the couple might be able to deal
with their expected financial situation and/or improve their long-term financial
situation. You should note that Lorrie does not want to return to the workforce if at