Financial Literacy Portfolio by: Nathan D

We learned about the 3 C's of Credit. The 1st C of credit is character. Character is defined as: how long you have been at your job, how long you have lived in one place, and do you pay the bills on time. The 2nd C of credit is capacity. Capacity is you ability to repay. It includes your income and debt. Finally, the last C of credit is capital, which is the stuff you own.
We also learned about the difference between a "Need" and a "Want". A "need" is something that is essential to the basic survival of humans. An example of this would be food or shelter. A "want" is something that makes life easier, but is not essential to survive. An example of this would be a car. We also learned the difference between a "good" and a "service". A "good" is something that you can physically use, such as a spoon or fork. A "service" is something that helps you, such as police officers.
We learned about the different types of economic systems. The first type is called traditional, this type of economy is poor, barely surviving, and nothing is modern. An example of this kind of economy is the Sami reindeer herders in northern Scandinavia. The next type of economy is called a command economy. This form of economy is where the government owns all the resources and controls everything. An example of this type of economy is North Korea. Another type of economy is called a market economy, this is where the individuals own all the resources. There is no example of this type of economy in this day and age. The last type of economy is a mixed economy. A mixed economy is a combination of command and market. The individuals buy resources, but the government watches over everything. An example of this kind of economy is North America or Hong Kong.
One of the most interesting units this semester was learning about how to choose different stocks/ compare stocks to each other. The first thing one would look at if you were to by a stock, is the price it costs to own 1 share of the stock. Then, one would look at the EPS and PE of the stock. EPS stands for earnings per share, this number you want to be high like 4, 5, or 6. PE stands for price earnings, one wants this number between 20-30 for average price. Less than 10 is a bargain and over 50 is overpriced. Furthermore, one would look at profit margin of a company. The formula to determine this is NET income divided by Total Revenue. Then, multiply by 100 to get a percentage. The average profit margin for most companies is between 0.5% - 3.0%. The higher the percentage, the better. Finally, one looks the debt a company has. To figure this out, one divides Total liabilities by Total assets, then multiply by 100 to get a percentage. Ideally, one wants the debt less than 30%.
Finally, we learned about bank reconciliation. A bank reconciliation is the process of matching the balances in an person's accounting records for a cash account to the corresponding information on a bank statement. In other words, one fills this out if their bank statement doesn't match their checkbook statement. They look at the deposits and the checks they wrote, and compare it to the bank statement. At the end, the two accounts have the same balance


Created with images by Moyan_Brenn - "Iceland" • falco - "cheque guarantee card credit card credit cards" • cafecredit - "Credit Dispute" • free pictures of money - "Money" • tpsdave - "rolls royce 1926 car automobile" • Nite Dan - Enjoypixel - "Food" • Zyada - "spoon001" • G20Voice - "Police" • Jan Tik - "Rainmaker" • Andrew Choy - "White House" • skeeze - "oil pump jacks energy industry" • rednuht - "That was supposed to be going up, wasn't it?" • DigitalRalph - "Apple Inc Logo" • cafecredit - "Stock Market" • AZRainman - "Bear Market" • Tax Credits - "Bank" • JeepersMedia - "TD Bank" • Daquella manera - "Cheques" • heidielliott - "Checkbook Cover Opened"

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