Author Topic: Questions about outstanding loans on your final year.  (Read 10995 times)

guard88

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Questions about outstanding loans on your final year.
« on: February 08, 2012, 04:54:59 PM »
anyways, I have been reading the players guide and I don't see them saying any thing about outstanding loans on your final year. The reason why I bring this is up is because i was thinking on my last decision year to take out a 250 mil 10 year loan. This would allow me to buy back as many outstanding shares to increase my earnings per share. I also could pay off previous loans, as you can do both at the same year to improve my credit score. What i'm trying to ask here is at first is it possible and second does it have any negative effects?

WinBusinessStrategyGameTips

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Re: Questions about outstanding loans on your final year.
« Reply #1 on: February 08, 2012, 10:07:47 PM »
Unfortunately your thought process does bring up a multitude of problems if you were to wait for the final year to buy back shares. It is more than possible to do so, but here are some things that aren't being considered.

1) A 250 million loan will undoubtedly lower your credit rating in the final year.

2) In theory, your stock price should be higher than it was in year 11 if you were a successful company. If it is currently at $25, then possibly by the last year it could be $100. It is more often cheaper to buy shares throughout the course of the game as it averages your share price cost.

3) EPS will go up in the final year, but EPS will go up the year you buy back shares too. Therefore if you buy back shares now, you will have the EPS benefits throughtout all the years afterwards (This could be up to 10 years). Whereas if you bought shares in the EPS in the final year, you will only get benefits that final year.


Throughout the history of BSG, it was actually possible to buy back all 3000 shares in year 11. Thus giving the company a huge advantage at the start of the game that would scale very well into the late game. This changed in 2011, and now you are only able to buy a few shares at a time. Therefore, waiting for the last year to buy back shares, would actually be contrary to what was an "overpowered" strategy that eventually got "nerfed". That's gaming talk, but that's the history of this.  

A company should buy shares if it financially feasible, and they feel the next year will be successful. Note that buying shares is financially burdensome, and must be taken with caution, as buying back shares does not make your company profitability innately.
« Last Edit: February 09, 2012, 02:10:42 PM by WinBSGTips »
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