Practice: Reading the Numbers
Fifteen scored problems that turn one fictional company's statements into returns, liquidity and debt measures, and growth rates, and then ask what the numbers mean together.
What you'll do
This set finishes the work on Pine Ridge Cycles. From the figures given, you'll calculate its return on equity, on assets, and on invested capital, its current and quick ratios, its net debt and interest coverage, and its growth. Then you'll stress-test it with a bad year and judge three situations where one flattering number hides a problem. Each answer comes with the working, and your score appears as you go. Nothing is recorded outside this browser.
This draws on
These are the figures you'll need for Pine Ridge Cycles, the fictional bicycle maker from the last two practice sets. Check each answer once you've committed to it: the score counts your first try.
| Last year | This year | |
|---|---|---|
| Revenue | 200 | 250 |
| Operating income | 30 | 40 |
| Interest expense | 5 | 5 |
| Net income | 20 | 28 |
| Cash | 22 | 30 |
| Accounts receivable | 20 | 25 |
| Inventory | 38 | 45 |
| Total assets | 170 | 200 |
| Current liabilities | 26 | 30 |
| Debt, none of it due within a year | 64 | 70 |
| Shareholders' equity | 80 | 100 |
Pine Ridge's tax rate is 20%, and it has had 14 million shares in both years.
The problems in this practice set are for members
Inside, each with a worked answer: Is it profitable? (4 problems); Is it financially strong? (6 problems); Is it growing? (3 problems); Putting it together (2 problems).
Membership opens every lesson in the curriculum, the capstone projects, the interactive tools, and the members-only channels in the Hyperion Entities Discord. The first lesson of every module stays free.