Q1: Why isn’t Melvin Ho’s checking account for $12,00 included with liquid assets?
A: We assume he will use that amount very quickly to meet immediate living expenses. The $12,000 could be used up in a month, depending on his cash needs and lifestyle. The remaining liquid assets represent his source of cash available to him over a longer period of time, during which he will need to meet all living expenses and any debt obligations, at a minimum.
Course overview: The Credit Write-Up Again