FIN533 INDIVIDUAL ASSIGNMENT PDF

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FINANCIAL PLANNING OF EN. MOHD SABRI AND FAMILY

BY: MUNIRAH BINTI MOHD SABRI (2019252562) BA2423A

SUBMISSION DATE: 18.12.2020 — PERSONAL FINANCIAL PLANNING (FIN533) — PREPARED FOR: MS. NORANIDA BINTI KAMALUDIN

TABLE OF CONTENTS

ACKNOWLEDGEMENT ....................... 3 BIOGRAPHY OF THE FAMILY ............ 4 FINANCIAL INFORMATION ............... 6 MONTHLY EXPENSES......................... 8 BALANCE SHEET STATEMENT .......... 9 CASH FLOW STATEMENT ................. 11 RATIOS ................................................. 13 INCOME TAX YEAR ASSESSMENT 2020 ...................................................... 15 COMMENT AND ADVISE ................... 16 APPENDIXES ....................................... 19 REFERENCES ..................................... 20

ACKNOWLEDGEMENT

First and foremost, praises and thank you to the God, the Almighty, for His blessings for me to complete the assignment given by the lecturer.

I would like to express my gratitude to my lecturer, Ms. Noranida binti Kamaludin because of her patience guide me to complete the assignment. Her guidance really helps me to succeed and complete this assignment within the time given. I also want to express my gratitude to my father, En. Mohd Sabri for his contribution to help me complete the assignment. Without his contribution, it will be difficult for me to complete the assignment within the time given.

Lastly, I also want to thanks to my family and friends for their support and encouragement throughout I complete this assignment. Their supports and encouragement really help me when I feel demotivated and I did complete the assignment successfully.

BIOGRAPHY OF THE FAMILY

Figure 1: Family Photo of En. Mohd Sabri

For this individual assignment for FIN533, I have been assigned to make financial planning for a family and I chose my own family to do the financial planning. En. Mohd Sabri bin Mohd Yusof is currently a private sector’s employee which his company is located at Subang Jaya, Selangor. He is 50 years old and married to Pn. Mazwin who is full-time housewife and endowed with 4 children which is 3 daughters and a son. Basically, this family consist of 6 members. The first child of his is Munirah, 20 years old who is still studying full-time in Bachelor of Business Administration (Hons) Finance at UITM Puncak Alam branch who make PTPTN loan to further her studies. The second and third child of his are Mukhlissah, 17 years old and Murzaliffah, 14 years old who is studying in secondary school at Sekolah Menengah Kebangsaan Perempuan Raja Zarina and go to school by take the school bus which fees as much as 65 per person and the payment until November. The youngest child of En. Mohd Sabri is Muhamad Muzamir Fitri, 12 FINANCIAL PLANNING OF EN. MOHD SABRI AND FAMILY

PAGE 4

years old who is still studying in primary school at Sekolah Kebangsaan Kampung Pendamar and did go to tuition which fees as much as RM 100 until November.

En. Mohd Sabri earns RM 5,500 salary with RM 300 bonus per month. His wife, Pn. Mazwin have babysitting 2 children and received wages as much as RM 850 per month. En. Mohd Sabri also have fund’s savings in EPF. In the middle of May, En. Mohd Sabri have received half of his fund’s savings in EPF as much as RM 70,000. En. Mohd Sabri and family had been living in an inheritance house of his late father at Kampung Pendamar, Klang, Selangor. Mr. Mohd Sabri also owns a Proton Wira and secondhand Proton Exora as his family car and a Honda Dash 125 motorcycle for his to go work. All the vehicles already have been fully paid. As for Proton Exora and Honda Dash 125, it is purchased by cash because En. Mohd Sabri got some extra money from his late father’s will. Other assets that En. Mohd Sabri owned are furniture, jewelleries and on August, he purchased a HP Laptop that cost RM 2500. En. Mohd Sabri also make an investment in Tabung Haji and EPF contribution.

FINANCIAL PLANNING OF EN. MOHD SABRI AND FAMILY

PAGE 5

FINANCIAL INFORMATION

Details

RM

Monthly salaries

5,500

Bonus per year

300

Pn. Mazwin's babysitting wages per month

850

Cash in hand

300

En. Mohd Sabri's savings account

5,000

Pn. Mazwin 's savings account

4,600

Received half of EPF's fund Market value of inheritance house

70,000 500,000

Market value of Proton Wira (2000) Market value of Proton Exora (2010) Market value of Honda Dash 125

7,000 18,500 6,299

EPF balance as at 31 Dec 2020

80,000

Tabung Haji balance as at 31 Dec 2020

35,000

Current value of furniture

10,000

Current value of jewelleries (20g x 239.79)

4,796

Astro bill outstanding

110

Borrowed from a friend due Dec 2020

300

Personal loan balance Personal loan monthly installment Monthly utilities bill FINANCIAL PLANNING OF EN. MOHD SABRI AND FAMILY

40,500 1,125 500 PAGE 6

Monthly groceries

300

Monthly parent's allowance

300

Monthly TM Unifi bill

89

Muzamir's monthly tuition fees

100

Monthly fuel and toll expenses

300

Monthly dining

200

Monthly children's bus fees

130

Monthly astro bill

61.32

Monthly children's school expenses

208

Car maintenance

300

Car insurance and road tax Motor's insurance and road tax

1,400 400

Family vacation

1,500

Annual zakat and EPF's zakat

3,400

Annual income tax

1,400

Clothing expenses

500

Monthly donation

50

Monthly EPF contribution

605

Munirah's university expenses

500

Purchased HP Laptop on August 2020

2,500

Monthly leisure and miscellaneous expenses

300

Family medical expenses

300

FINANCIAL PLANNING OF EN. MOHD SABRI AND FAMILY

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MONTHLY EXPENSES

Details Utilities bill expenses Groceries expenses Parent's allowance TM Unifi bill Muzamir 's tuition fees expenses Fuel and toll expenses Dining expenses Children's bus fees Astro bill expenses Children's school expenses Car maintenance Car insurance and road tax Motor insurance and road tax Family vacation Annual zakat and EPF's zakat Annual income tax Clothing expenses Donation expenses EPF contribution Purchased HP Laptop Monthly leisure and miscellaneous expenses Munirah's university expenses Family medical expenses Personal loan monthly installment Borrowed from a friend due Dec 2020

JAN RM

FEB RM

500 300 300 89 100 300 200 130 61.32 208

500 300 300 89 100 300 200 130 61.32 208

MAR RM 500 300 300 89 100 300 200 130 61.32 208

Monthly Expenses APR MAY RM RM 500 500 300 300 300 300 89 89 100 100 300 300 200 200 130 130 61.32 61.32

JUN RM

JUL RM

500 300 300 89 100 300 200 130 61.32

500 300 300 89 100 300 200 130

AUG RM 500 300 300 89 100 300 200 130

208

208

SEP RM

OCT RM

500 300 300 89 100 300 200 130 122.64 208

NOV RM

500 300 300 89 100 300 200 130 122.64

DEC RM

500 300 300 89 100 300 200 130 61.32

500

500 300 300 89 300 200 61.32 500

1,400 400 1,500 3,400 1,400 50 605 300

1,125

50 605 300

1,125

50 605 300

1,125

50 605 300

1,125

500 50 605 300

1,125

50 605 300

1,125

50 605 300

50 605 2,500 300

1,125

300 1,125

50 605

50 605

50 605

50 605

300 500

300

300

300

1,125

1,125

1,125 300

1,125

BALANCE SHEET STATEMENT

Liquid Asset Cash in hand En. Mohd Sabri's savings account Pn. Mazwin's saving's account

En. Mohd Sabri and Family Balance Sheet as at 31 December 2020 RM Non-Current Liabilities 300 Personal loan balance 5,000 4,600

Lifestyle Assets Market value of inheritance house Market value of Proton Wira (2000) Market value of Proton Exora (2010) Market value of Honda Dash 125 Current value of furniture Current value of jewelleries Purchased HP Laptop (current value) Investment Assets EPF balance as at 31 Dec 2020 Tabung Haji balance as at 31 Dec 2020 Total Assets

Current Liabilities 500,000 Astro bill outstanding 7,000 Borrowed from a friend due Dec 2020 18,500 6,299 10,000 4,796 2,500

80,000 35,000 Total Liabilities Net Worth 673,995 Total Liabilities and Net Worth

RM 40,500

123 500

41,123 632,872 673,995

Regarding on the balance sheet as at 31 December 2020, En. Mohd Sabri and family have total assets as much as RM 673,995 which is quite high. The liquid assets are on cash in hand and En. Mohd Sabri and Pn. Mazwin’s savings account are RM 9900 in total. Next, the lifestyle assets that En. Mohd Sabri owned are he have 2 cars which is Proton Wira and Proton Exora which he had fully paid long years ago. He also has a motorcycle which is Honda Dash 125 which also fully paid last year. Furthermore, En. Mohd Sabri also got the inheritance house from his late father which cost RM 500,000 at market value. Moreover, En. Mohd Sabri also owned furnitures that cost RM 10,000 and his wife and his daughters also owned jewelleries as much as 20 gram which cost RM 4,796 at current value. This year, in August, En. Mohd Sabri had purchased a HP Laptop that cost RM 2,500 at current value. For investment, En. Mohd Sabri used EPF contribution and Tabung Haji as his place to invest his money. These assets are important because these assets could be benefit to the family in the future and could be the emergency fund when something unwanted happen.

The current liabilities are Astro bill outstanding which the amount is RM 123 and borrowed from a friend due December 2020 as much as RM 500 and already paid within this year because current liabilities duration to be paid is not more than one year. En. Mohd Sabri has only a current liability which is personal loan and the balance is RM 40,500. En. Mohd Sabri make this loan in the year of 2018 and the total loan with 7% interest rate is RM 67,500.

Personal Loan Total loan Interest rate Tenure

RM 67,500 7% 5 years

Total installment

RM 13,500

Total monthly installment

RM 1,125

Total loan balance

RM 40,500

Total tenure balance

3 years

CASH FLOW STATEMENT

En. Mohd Sabri and Family Cash Flow Statement for the year ended 31 December 2020 RM Cash Inflows Monthly Salaries (5,500 x 12) Pn. Mazwin's babysitting wages (850 x 12) Other income : Bonus per year (300 x 12) Received half of EPF's fund

RM

66,000 10,200 3,600 70,000 149,800

Total Cash Inflows Cash Outflows Personal loan monthly installement (1,125 x 12) Monthly utilities bills (500 x 12) Monthly groceries (300 x 12) Monthly parent's allowance (300 x 12) Monthly TM Unifi bills (89 X 12) Muzamir's monthly tuition fees (100 x 11) Monthly fuel and toll expenses (300 x 12) Monthly dining (200 x 12) Children's bus fees (130 x 11) Monthly Astro bills Children's school expenses (208 x 12) Car maintenance (250 x 2 x 2 ) Car insurance and road tax Motor insurance and road tax Family vacation Annual zakat and EPF's zakat Annual income tax Clothing expenses Monthly EPF contribution Monthly donation (500 x 12) Munirah's university expenses Purchased HP Laptop on August 2020 Monthly leisure and miscellaneous expenses (300 x 12) Family medical expenses Total Cash Outflows Total Cash Flows

13,500 6,000 3,600 3,600 1,068 1,100 3,600 2,400 1,430 736 1,248 1,000 1,400 400 1,500 3,400 1,400 500 7,260 6,000 500 2,500 3,600 300 68,042 81,758

Regarding on the cash flow statement for the year ended 31 December 2020, the income of En. Mohd Sabri’s monthly salaries, his bonus per year and Pn. Mazwin’s wages per month. Moreover, for this year, En. Mohd Sabri had received half of his EPF’s fund as much as RM 70,000. Diagram 1 below shows the expenses that this family spent within this year. As the pandemic of COVID-19 continuing until the end of this year, some of the expenses such as children’s school expenses decreased unlike any other year.

EN. MOHD SABRI AND FAMILY'S EXPENSES 16,000 14,000

13,500

12,000 10,000 8,000

7,260 6,000

6,000

6,000 4,000 2,000

3,6003,600

3,600 3,400 2,400 1,500 1,400 1,430 1,2481,0001,400 1,0681,100 736 400 500

-

Diagram 1

3,600 2,500 500

300

RATIOS

Asset Liquidity i.

Liquid asset to take-home pay ratio Liquid assets / Take-home pay x 100 = [cash in hand + En. Mohd Sabri saving’s account + Pn. Mazwin saving’s account] / [Income – Income tax] = (300 + 5,000 + 4,600) / (66,000 – 1,400) = 9,900 / 64,600 = 15.33% @ 1.84 months The family’s liquidity condition is bad because it is not between 25% - 50% range and 3 or 6 months. En. Mohd Sabri must achieve liquid assets between 25% - 50% or 3 or 6 months in order to be on the safe side.

ii.

Current ratio Liquid assets / current liabilities = [Cash in hand + En. Mohd Sabri saving’s account + Pn. Mazwin saving’s account] / [Astro bill outstanding + Borrowed from a friend due December 2020] = (300 + 5,000 + 4,600) / (123 + 500) = 9,900 / 623 = 15.89 times @ RM 15.89 The ratio is more than 1 which portrays En. Mohd Sabri has high liquidity position to pay short term obligations.

FINANCIAL PLANNING OF EN. MOHD SABRI AND FAMILY

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iii.

Debt ratio (Total liabilities / Total assets) x 100 = (41,123 / 673,995) x 100 = 6.10% En. Mohd Sabri’s debt ratio is less than 30% which he will not face any difficulties in getting new loans because the ability to pay debt increased.

iv.

Debt service coverage ratio (Income – Income tax) / Personal loan monthly installment = (66,000 – 1,400) / 13,500 = 4.79 times @ RM 4.79 The ratio is more than 1 which portrays the family’s ability to meet their current debt obligation. The higher the ratio, the better because it means the family has the ability to make payments of debt.

FINANCIAL PLANNING OF EN. MOHD SABRI AND FAMILY

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INCOME TAX YEAR ASSESSMENT 2020

En. Mohd Sabri and family Tax Return for the year of assessment 2020 RM RM Aggregate income: 66000 Monthly salaries (5,500 x 12) Bonus per year (300 x 12) 3600 69600 Total aggregate income -600 (-) Monthly donation (50 x 12) 69000 (-) Reliefs Individual 9000 4000 Wife Children: 8000 Munirah studied in Degree at UITM Puncak Alam Mukhlissah studied in secondary school 2000 2000 Murzaliffah studied in secondary school Muzamir studies in primary school 2000 EPF contribution 7000 1500 Parent 2500 Lifestyle (HP Laptop + Internet) -38000 Total Reliefs Chargeable income 31000 Income tax computation: 150 On the first 20,000 On the next (11,000 x 3%) 330 Total income tax 480 (-) Rebates: 400 Self (1...