In the animal world, material wellbeing is largely defined by food supply and territory. In our sophisticated human world, we measure wellbeing by disposable income and assets. This report sets out your financial wellbeing - according to the information you have entered.
The first tab shows you the summary report. The remaining tabs will show you the details behind each summary item. You can select each report by clicking the appropriate tab.
FINANCIAL HEALTH SUMMARY
This gives you a concise picture of how you have done over the preceding twelve months in terms of Net Income and Net Assets, and also tells you how you are doing against key Income / Asset ratios.
OPENING BAL CLOSING BAL
NET INCOME
Net Cashflow Income 18 % DEFICIT 4182.10Dr
Income Adjustments 5361.62
TOTAL NET INCOME 4 % SURPLUS 1179.52
NET ASSETS
Cash in Bank accounts Trend Better 10618.12 21969.82
Owed by Debtors Trend Better 184.13 104.62
Owed to Credit Cards 0.00 0.00
Owed to Creditors Trend Better 2546.40Cr 947.56Cr
NET CASHFLOW ASSETS Trend Better 8255.85 21126.88
Other Net Current Assets Trend Worse 18675.06 6983.55
Net Fixed Assets 63749.75 63749.75
TOTAL NET ASSETS Trend Better 90680.66 91860.18
KEY RATIOS
Bank balances >= 1 month's cashflow Exp OK 21969.82 2306.65
Debtors owing < Creditors owed OK 104.62 947.56Cr
Borrowings < 3 times cashflow Income OK 947.56Cr 23497.75
Gross Assets > 3 times cashflow Income OK 92807.74 23497.75
Gross Assets > 2 times Liabilities OK 92807.74 947.56Cr
Sterling
NET CASHFLOW INCOME
This represents all transactions you have classified as income or expenditure, that originate in a Bank account, Charge (Credit Card) account, Debtor or Creditor account, or Customer or Supplier account. ie paid out of money you have, have borrowed or are owed.
The example shows a cash income shortfall which has had to be funded out of assets.
INCOME ADJUSTMENTS
This is represented by transfers you have made from non cashflow accounts to or from income and expenditure accounts. Examples of this may be the profit or loss on the sale of an asset or asset depreciation charged as an expense to show the true cost of owning (eg) your car.
You may also have recorded regular mortgage company payments as a single figure and then made separate transfers of the insurance and interest elements. Any transfer between and income or expense account and a non-cashflow asset or liability account will be included under this report heading.
The example shows the profit made on the sale of investments - made to fund the cash income shortfall.
TOTAL NET INCOME
If you are reviewing an earlier year, this Total Net Income figure will be the same as shown in the Income & Expenditure report for that year.
If you are reviewing the current year, the Total Net Income figure will represent the preceing 12 months, and not align exactly with either this year or last year's figure shown in the Income & Expenditure report.
CASH, OWED BY AND OWED TO - NET CASHFLOW ASSETS
The example shows an uncomplicated situation with reasonable cash reserves, negligible amounts owed by others, and a reduced amount due in this case to the Tax man. The closing balance is greater than the opening balance despite the cash income shortfall. The increase comes from the sale of assets.
OTHER NET CURRENT ASSETS
The example shows a reduction in assets, ie have been sold to provide cash to cover income shortfall.
NET FIXED ASSETS
In personal accounts, this category will normally represent the value of your house or appartment, less any mortgage amounts owed. There may in fact be some additional hidden value here in that your property may have a greater market value than you have recorded in your accounts.
TOTAL NET ASSETS
This is the bottom line of what you are worth. It is the same figure as shown in the Balance Sheet.
RATIOS
The ratios are just common sense rules of thumb:
Bank balances >= 1 month's cashflow Expense Do you have enough cash to pay normal monthly expenses?
Debtors owing < Creditors owed If you are short of cash you can ask others to pay what they owe you.
Borrowings < 3 times cashflow Income Try to keep your repayments commitment affordable.
Gross Assets > 3 times cashflow Income Try to build up your assets.
Gross Assets > 2 times Liabilities Try not to borrow too much against your assets.
These merely form a consistent comparison base for you to judge how you are doing and what actions, if any, you need to take.
INTERPRETATION
This report will give you an instant snapshot of how you are doing. To be sure you understand what it tells you, you will need to delve behind the figures with the help of the dtailed breakdowns provided by the other tabbed headings. You may find that you have recorded items incorrectly or you may not have correctly specified some accounts as cashflow accounts.
The purpose of the report is to help you understand your financial position to be able better plan your future. Imagine taking this report to your Bank manager in order to get a loan. He will ask you a number of penetrating questions concerning the figures shown. If you can ask yourself those same questions - and answer them, then you are in good shape.
The example shows the financial position of a modestly financed elderly pensioner. Had these been the finances of a much younger person, the conclusion would have been that they should get on their bike and either earn more or cut their expenses.
NB. Cashflow accounts in foreign currency may have exchange rate variations from balances shown in financial reports. This is because the B/Fwd balance is a single conversion done at the exchange rate prevailing at the date of the B/Fwd. The B/Fwd value, when the individual account is displayed in other than its native currency, is the accumulation of each individual entry converted at the rates prevailing at the dates of those entries.