Glo-Bus Quiz 2 is an exceptionally challenging quiz unless you have a firm grasp of all of the formulas and how they interact in the game itself.

Here is an example question.

If a company earns net income of $35 million in Year 8, has 10 million shares of stock, pays a dividend of $1.50 per share, and has annual interest costs of $15 million, then

the company’s retained earnings for Year 8 would be $35 million. 

Incorrect as retained earnings is after the share and the interest costs are paid out.

the company’s retained earnings for Year 8 would be $5 million (net income of $35 million less dividend payments of $15 million less $15 million in interest payments) and its Year 8 EPS would be $0.50.

Incorrect as annual interests costs are taken into account for the net profit calculation.

the company’s earnings per share would equal $2.00 (net income of $35 million less dividend payments of $15 million = $20 million divided by 10 million shares).

EPS is calculated before dividends are paid out.

the company would have Year 8 EPS of $3.50 and Year 9 retained earnings of $10 million.

This is partially true as EPS is $3.50. That’s a solid number. However, retained earnings is not $10 million.

the company would have EPS of $3.50 for Year 8 and also its retained earnings for Year 8 would be $20 million

(net income of $35 million less dividend payments of $15 million).

For further help on Glo-Bus Quiz 2, please email me.