The Global Business Simulation Strategy Game - Glo - Bus Quiz Answers

If you're in a business strategy class, you may bepercentages? (These percentages are one of the
taking the Global Business Simulation Strategy Game,components used in determining the company's credit
or for short, "Glo-Bus". You will most likely be takingrating, as explained on the Help screen for the
two quizzes in this course, Glo-Bus Quiz 1, andComparative Financial Performance page of the GSR.)
Glo-Bus Quiz 2. Both quizzes will go over conceptHere are the 5 answers.
basics of the game, and especially Quiz 2 can have20% debt and 80% equity or 20:80.
very difficult questions. Many of the questions are27% debt and 73% equity or 27:73.
financial based. Here's one example question that you35% debt and 65% equity or 35:65.
will most likely get.37% debt and 63% equity or 37:63.
Given the following Financial Statement data:None of these.
Income Statement Data Quarter 1So to answer this question, we must look at this
(in 000s)income statement and conclude what debt and
Sales Revenues $50,000equity is.
Operating Profit $14,400Total Equity shows itself at $90,000, so that's easy.
Net Income $9,555But the real hard part is deciphering what debt is.
Balance Sheet DataBelieve it or not, but current liabilities isn't part of
Total Current Assets $70,000"debt". And that's a mistake that people make.
Total Assets $149,000So debt is simply Long term debt at $33,000 But
Total Current Liabilities $26,000then what?
L-T Debt (draw against credit line) $33,000To figure out the correct ratio, the formula for debt
Total Equity $90,000ratio= debt/(debt+equity)
Other Financial Data[And for note the equity ratio=equity/(debt+equity)]
Depreciation $4,000Or therefore 33,000/(33,000+90,000)=.268 or what
Dividend payments $2,250equals 27%. Therefore the debt ratio is 27%, and
Based on the above figures, the company's capitalthe balance being 73% is equity.
structure consists of what debt and equityThe correct answer is the second one!