For those who’re in a enterprise technique class, chances are you’ll be taking the International Enterprise Simulation Technique Recreation, or for brief, “Glo-Bus”. You’ll most definitely be taking two quizzes on this course, Glo-Bus Quiz 1, and Glo-Bus Quiz 2. Each quizzes will go over idea fundamentals of the sport, and particularly Quiz 2 can have very tough questions. Lots of the questions are monetary based mostly. This is one instance query that you’ll most definitely get.
Given the next Monetary Assertion information:
Revenue Assertion Knowledge Quarter 1
Gross sales Revenues $50,000
Working Revenue $14,400
Internet Revenue $9,555
Steadiness Sheet Knowledge
Whole Present Belongings $70,000
Whole Belongings $149,000
Whole Present Liabilities $26,000
L-T Debt (draw towards credit score line) $33,000
Whole Fairness $90,000
Different Monetary Knowledge
Dividend funds $2,250
Primarily based on the above figures, the corporate’s capital construction consists of what debt and fairness percentages? (These percentages are one of many elements utilized in figuring out the corporate’s credit standing, as defined on the Assist display for the Comparative Monetary Efficiency web page of the GSR.)
Listed below are the 5 solutions.
20% debt and 80% fairness or 20:80.
27% debt and 73% fairness or 27:73.
35% debt and 65% fairness or 35:65.
37% debt and 63% fairness or 37:63.
None of those.
So to reply this query, we should take a look at this revenue assertion and conclude what debt and fairness is.
Whole Fairness reveals itself at $90,000, in order that’s simple.
However the true exhausting half is deciphering what debt is. Imagine it or not, however present liabilities is not a part of “debt”. And that is a mistake that individuals make.
So debt is just Long run debt at $33,000 However then what?
To determine the proper ratio, the system for debt ratio= debt/(debt+fairness)
[And for note the equity ratio=equity/(debt+equity)]
Or due to this fact 33,000/(33,000+90,000)=.268 or what equals 27%. Due to this fact the debt ratio is 27%, and the steadiness being 73% is fairness.
The proper reply is the second!