Example of Calculations in a Personal Financial Statement
Example calculation of the total debt service ratio (ownership percentage of assets=100%)
Assets
Asset Item | Asset Type | Amount | Currency | Ownership Percentage |
|---|---|---|---|---|
A1 | Real estate | 100,000 | EUR | 100% |
A2 | Deposit account | 2,000 | EUR | 100% |
Income
Income Item | Income Type | Frequency | Amount | Currency | Linked Assets |
|---|---|---|---|---|---|
I1 | Net salary | Monthly | 30,000 | EUR | Not applicable |
I2 | Rental income | Monthly | 2,000 | EUR | Linked to A1 |
I3 | Investment income | Yearly | 100 | EUR | Not applicable |
Liabilities
Liability Item | Liability Type | Current Balance | Currency | Balance Amount Percentage | TDS Exclusion |
|---|---|---|---|---|---|
L1 | Personal loan | 20,000 | EUR | Not applicable | Not applicable |
L2 | Bridge loan | 30,000 | EUR | 2,5% | Not applicable |
Expenses
Expense Item | Expense Type | Frequency | Amount | Currency | Linked Liabilities | Linked Assets |
|---|---|---|---|---|---|---|
E1 | Cost of living/consumption | Monthly | 5,000 | EUR | Not applicable | Not applicable |
E2 | Operating cost of vehicle | Monthly | 1,250 | EUR | Not applicable | Not applicable |
E3 | Maintenance of rented property | Monthly | 1,500 | EUR | Not applicable | A1 |
E4 | Installment payment | Monthly | 3,500 | EUR | L1 | Not applicable |
E5 | Property tax | Monthly | 1,250 | EUR | Not applicable | A1 |
Calculations executed by the system
Net Excess/Shortfall = Rental Income (I2) — Expense from real estate asset (E3+E5) = 2,000 – (1,500+1,250) = –750 (shortfall)
Monthly Commitment = (E1+E2) (∑non-linked expenses) + (E3+E4+E5) (∑linked expenses) + (L2x2,5%) (Balance amount percentage of liability where TDS exclusion indicator is not set) — Net shortfall = 5,000 EUR + 1,250 EUR + 1,500 EUR + 3,500 EUR + 1,250 EUR + 750 EUR + 750 EUR = 14,000 EUR.
Monthly Income = I1 + I2 + I3 = 30,000 EUR + 2,000 EUR + 100 EUR = 32,100 EUR
TDSR = (monthly commitment/monthly income) x 100 = (14,000 EUR / 32,100 EUR) x 100 = 43.61
Note
Steps to calculate the monthly commitment and monthly income
Monthly commitment
Monthly commitment = ∑of non-linked expenses + ∑ of linked expenses where TDS exclusion indicator is not set + Net shortfall (if available)
Non-linked expenses are expenses that are not linked to any liability.
Linked expenses are expenses that are linked to a liability and that don’t have the TDS exclusion indicator set.
In the determination of the net excess/shortfall two cases are possible:
The ownership percentage is 100%.
Net Excess/Net Shortfall = Rental income – ∑ Associated expense – Mortgage payment (expense type) – Buffered mortgage payment (25% of mortgage payment)
Note: Expense type 002 or installment payment is considered for this.
The ownership percentage is less than 100%.
Net Excess/Net Shortfall = Rental income – Buffered mortgage payment (25% of mortgage payment expense type)
The system calculates the net excess/shortfall for all assets of type
Real Estate
. The net excess/shortfall is determined using business rules that consider the ownership percentage, the rental income and all expenses associated or linked to theReal Estate
asset. ForReal Estate
assets, the net excess/shortfall value is calculated to determine if the asset is to be considered in the monthly commitment or monthly income. If the calculation results in a positive value (net excess), it is added to the monthly income. If the calculation results in a negative value (net shortfall), it is added to the monthly commitment.
Monthly Income
Monthly income = ∑ of income + net excess (if available)