Help
Course Catalog > Stocks > 100
Stocks 108: Learn the Lingo--Basic Ratios

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
A stock's price/cash flow ratio is calculated by dividing the stock price by the total operating cash flow.
Choose wisely. There is only one correct answer.
False. The ratio uses operating cash flow per share, not total operating cash flow.
2.
A company's dividend yield is calculated by _______.
Choose wisely. There is only one correct answer.
Dividing annual dividend per share by stock price per share.
3.
Companies in which of the following industries would likely have the highest price/book ratios?
Choose wisely. There is only one correct answer.
Pharmaceuticals. The highest P/B ratios are in fields such as pharmaceuticals and consumer products, where intangibles are more important.
4.
Earnings per share (EPS) is a company's net income divided by its number of shares outstanding.
Choose wisely. There is only one correct answer.
True. As such, EPS can give you a quick idea of a company's profitability, though it has its limits.
5.
If a company has earned $1.50 per share and its share price is $30, what is its P/E?
Choose wisely. There is only one correct answer.
20. The P/E is determined by dividing the price per share ($30) by the earnings per share ($1.50), yielding a P/E of 20 in this case.
6.
The three types of a business's profit margins are gross margin, net margin, and _______.
Choose wisely. There is only one correct answer.
Operating margin.
7.
A company's price/sales ratio is its stock price divided by _______.
Choose wisely. There is only one correct answer.
Sales per share. Since we are using stock price, we must also use sales per share.
8.
If a company's market capitalization is $100 million and there are 5 million shares of stock outstanding, what is the stock price right now?
Choose wisely. There is only one correct answer.
$20. Market cap is stock price multiplied by number of shares outstanding.