Description: Canadians are paying 45% more in interest costs than they were last year at this time. With the Bank of Canada raising interest rates to help control inflation, Canadians are facing financial risks unknown to them since the 1990s. The Bank of Canada is keeping an eye on households falling behind on their debt, noting that the volume of arrears on both car loans and credit cards have reached levels at, or above, the pre-pandemic situation. Another area of concern is the number of debtors reaching out to unregulated private lenders for help. On a positive note, overall household net worth is up slightly, primarily due to stock market valuations.
Date: March 14, 2023
1) How many of your classmates are having to worry about rising interest costs?
2) Have you ever calculated your net worth?
3) Page 10-28, of Wiley’s Understanding Financial Accounting speaks of a ratio that can help us determine a company’s ability to handle interest payments. What two names does this ratio go by?