Raymond feels that he is wealthy because he has $10 000 cash in the bank, two expensive cars worth about $100 000, and one expensive house worth about $1 million. However, he also has about $25 000 in credit card liability and a $20 000 bank loan due within six months. What financial problem does Raymond have?

Question

Quizplus · Accepted Answer

Raymond's liquidity ratio is too low because even though he has high-value assets, he has liabilities that require immediate payment that he may not be able to cover with his cash on hand. This means that he may have difficulty meeting his short-term financial obligations.

Raymond Feels That He Is Wealthy Because He Has $10