Chapter 5 – Valuing Companies

The Price Earning Ratio

This lesson will help you understand how a company is valued.
Knowing the valuation mechanisms allows you to both grow through acquisition, but also to intelligently exit a business if you have decided to do so.

 

Take the quiz below then move on to chapter 6

(GE versus Apple – The industrialist versus the finder)

 

 17%

1.

A company has a turnover of 100, assets of 50, a profit of 10 and a PE of 20, what is its value?

2.

A company is worth 20 million euros and has 500,000 shares. What is the unit price of the share?

3.

A leading company in the steel production sector probably has a PE of:

4.

A world leader in the Internet field probably has a PE of:

5.

Gaining market share is easier in a market that is growing at:

6.

My market is growing at 2%. What growth strategy should I focus on?