Practice: Valuation Fundamentals
Sixteen scored problems that put a price on one fictional company with market cap, enterprise value, four multiples, and three yields, and then test what those numbers can and can't tell you.
What you'll do
Part 3's practice sets analysed Pine Ridge Cycles as a business. This set asks what its shares are worth paying. You'll calculate its market cap and enterprise value, its trailing and forward P/E, PEG, price-to-sales, and EV/EBITDA, and its earnings and free cash flow yields. Then you'll judge five situations where a multiple looks cheap or expensive and decide what it really means. Each answer comes with the working, and your score appears as you go. Nothing is recorded outside this browser, and nothing here is a recommendation.
This draws on
Pine Ridge Cycles is the fictional bicycle maker from the Part 3 practice sets. Its shares trade at $30. Check each answer once you've committed to it: the score counts your first try.
| Share price | $30 |
|---|---|
| Shares outstanding | 14 million |
| Revenue | 250 |
| Operating income | 40 |
| Depreciation | 10 |
| Net income | 28 |
| Earnings per share | $2.00 |
| Earnings per share expected next year | $2.30 |
| Free cash flow | 10 |
| Debt | 70 |
| Cash | 30 |
The estimate for next year is hypothetical, like everything else here.
The problems in this practice set are for members
Inside, each with a worked answer: Price and value (1 problem); What the whole company costs (3 problems); Multiples (6 problems); Yields (3 problems); What the numbers mean (3 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.