# Keep studying!

1.
A company's price/sales ratio is its stock price divided by _______.
Sales per share. Since we are using stock price, we must also use sales per share.
2.
Earnings per share (EPS) is a metric that should not be used in isolation.
True. As with other financial ratios, you should use EPS along with other metrics.
3.
Companies in which of the following industries would likely have the highest price/book ratios?
Pharmaceuticals. The highest P/B ratios are in fields such as pharmaceuticals and consumer products, where intangibles are more important.
4.
A company's gross margin is calculated by dividing _______.
Gross profits by revenues.
5.
The price/cash flow ratio measures cash rather than paper profits.
True. For this reason, the ratio has a certain reliability that management likes.
6.
A company's dividend yield is calculated by _______.
Dividing annual dividend per share by stock price per share.
7.
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?
\$20. Market cap is stock price multiplied by number of shares outstanding.
8.
If a company's P/E is 30, its earnings yield is _______.
3.3%. The earnings yield is calculated by inverting the P/E ratio. In this case the earnings yield is 1/30 or 3.3%.