New Glo-Bus Simulation Negative Equity

Due to the high inflation of Glo-Bus, you have to be very mindful of Negative Equity. There is a chance that many people will never find themselves in this situation, but I need to mention it for the person who may see it unknowingly. By buying back shares you are taking money out of retained earnings, a component of equity. If your share repurchase is so large that ending equity is in the negative, you may create for yourself an awful circumstance which I’ve found myself in. By having a negative equity your company is unable to calculate a return on equity, and therefore you will get a big fat 0 for RoE. It isn’t pleasant.

Equity is calculated as an average between beginning equity and ending equity, so if your equity is lightly in the negative, it can be offset by your positive beginning equity. Regardless be careful of this, by having retained earnings extremely low so that it is nearly negative does come with the strong benefit of having insanely high RoE.. of potentially 100s% of higher which looks great on the scoreboard. But you must tread carefully as receiving 0 points is really bad and kills your credit rating and your stock price.

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