Global Business Simulation Strategy Game – Glo – Bus Quiz Answers

Global Business Simulation Strategy Game – Glo – Bus Quiz Answers

If you’re in a business strategy class, you might take the Global Business Simulation Strategy Game, or “Glo-Bus” for short. You will most likely take two quizzes in this course, Glo-Bus Quiz 1 and Glo-Bus Quiz 2. Both quizzes will cover the fundamentals of the game and Quiz 2 in particular may have very difficult questions. Many of the questions are financial based. Here’s a sample question you’re likely to get.

Given the following data from the financial statement:

1st quarter earnings report data

(in 000 sec.)
Sales revenue $50,000
Operating profit $14,400
Net income $9,555

Balance sheet data
Total current assets $70,000
Total assets $149,000
Total current liabilities $26,000
LT debt (drawing against line of credit) $33,000
Total equity $90,000

Other financial data
Depreciation $4000
Dividends paid $2,250

Based on the above figures, the company’s capital structure consists of what percentages of debt and equity? (These percentages are one of the components used in determining a company’s credit rating, as explained on the help screen for GSR’s comparative financial results page.)

Here are the 5 answers.

20% debt and 80% equity or 20:80.
27% debt and 73% equity or 27:73.
35% debt and 65% equity or 35:65.
37% debt and 63% equity or 37:63.
None of these.

So to answer this question we need to look at this income statement and conclude what is debt and equity.

The total equity shows up at $90,000 so it’s easy.

But the really hard part is deciphering what debt is. Believe it or not, current liabilities are not part of “debt.” And this is a mistake that people make.

So the debt is just a long-term debt of $33,000. But then what?

To find out the correct ratio, the debt ratio formula = Debt/(Debt+Equity)

[And for note the equity ratio=equity/(debt+equity)]

Or therefore 33,000/(33,000+90,000)=.268 or what is equal to 27%. Therefore, the debt ratio is 27% and the balance of 73% is equity.

The correct answer is the second!

#Global #Business #Simulation #Strategy #Game #Glo #Bus #Quiz #Answers

Leave a Comment

Your email address will not be published. Required fields are marked *