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

Profit and loss data, quartered 1

(in 000s)
Revenues from the sale of $ 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
L-T Debt (draw against credit line) $ 33,000
Total capital of $ 90,000

Other financial data

Other financial data ...

Other financial data ...

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

Here are 5 responses.

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 must look at the income statement and conclude that the debt and equity.

Total shareholders' equity is shown at $ 90,000, so it's easy.

But the real hard part is deciphering what goes on. Believe it or not, but an ongoing commitment is part of the "debt". And it was a mistake that people make.

Therefore, the debt is simply a long-term debt of $ 33,000, however, what then?

to understand the exact ratio, the formula of debt = debt / (debt + equity)

[A note to equity ratio = equity / (debt + equity )]

Or So 33,000 / (33,000 +90,000) =. 268, or what amounts to 27%. Therefore, the debt is 27%, and the rest 73% of the capital.

The correct answer is the second one!