Title: Can Inherited $1 Tagline: Can Inherited $1.8M IRA Support Secure Retirement? Use Current Ratio to Assess Potential Business Investments Problem: Martha, a 68-year-old widow, recently inherited a $1.8 million Traditional IRA from her late husband. Seeking to supplement her social security and small pension, she is considering investing a portion of the IRA in a local bakery business owned by a family friend. The bakery is requesting a $200,000 loan in exchange for a 10% equity stake. Martha needs to assess the bakery's financial health before committing a significant portion of her IRA to this venture. The bakery's balance sheet shows current assets of $300,000 and current liabilities of $250,000. Without a clear understanding of financial ratios, Martha is unsure if this is a sound investment, potentially jeopardizing a large chunk of her inheritance and retirement security. Solution: Using the Current Ratio Calculator, Martha can quickly determine the bakery's short-term liquidity. Inputting current assets of $300,000 and current liabilities of $250,000 yields a current ratio of 1.2. This indicates the bakery has $1.20 of current assets for every $1 of current liabilities, suggesting reasonable short-term financial health. However, Martha also uses the Quick Ratio Calculator to exclude inventory (dough, ingredients, etc.) from current assets, revealing a more conservative picture of immediate liquidity. Further, Martha uses the Tax Equivalent Yield Calculator to compare the potential return of the bakery investment (equity stake + loan interest) to other investment options, considering her tax bracket and the IRA's tax-deferred status. This combined analysis provides a comprehensive view, allowing her to make an informed decision. ROI: By identifying the bakery's financial risks and potential tax implications BEFORE investing, Martha can avoid potentially losing a significant portion of her $200,000 investment. A poor current ratio, coupled with a low tax-equivalent yield compared to alternatives, might lead Martha to decline the investment, potentially saving the entire $200,000. Even a marginal increase in her understanding can lead to a better diversified portfolio with a 1% higher annual return, resulting in an extra $18,000 per year on her overall portfolio. Description: Plan for a comfortable retirement with insights from our Current Ratio Calculator. Quickly evaluate business investment opportunities and make informed decisions about your inherited IRA funds. Category: Lead Gen