Monday, December 15, 2008

Personal finance ratios

At MBA here, in finance, we learn a lot of company ratios, starting from debt ratio to P/E ratio to asset turnover ratio and ROE and a hell lot more. Today I was going through some new blog and found the below:

Investment Income to Salary Target > 0.8 Investment Income Ratio = -2.36

Savings to Salary Target > 20 Current Savings Ratio = 20.1

Debt To Salary Target = 0 Current Debt Ratio = 1.47

Started me thinking, this is indeed a very good basic information to classify people for whom investment advice is to be given. I had never before thought of using such ratios when I was the personal financial advisor to my friends and colleagues.

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