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1.
Why should you be wary of using the cash return measurement for evaluating foreign companies?
They may have different definitions of cash flow. In other words, what they call cash flow and what we call cash flow may be two different things, thus skewing the usefulness of the measurement.
2.
What would a stock dividend yield of 0% tell you?
The company is not paying any dividend at all. If you have a zero on the top half the formula, where the annual dividends per share go, then no dividend is being paid.
3.
In a price/book ratio, what exactly is the "price" part of it?
The stock's market price. The price is the market price, while the "book" part is the book value of a share.
4.
A company's price/earnings growth ratio uses _______.
Future estimates. The price/earnings growth ratio is used to get a sense of what a company will be like in the future.
5.
A firm's price/sales ratio is found by dividing its stock price by its _______.
Sales per share. Since we are using stock price, we must also use sales per share.
6.
A price/earnings ratio that uses future earnings estimates to calculate the ratio is normally called _______.
A forward price/earnings ratio. As opposed to a trailing price/earnings ratio, which looks at past earnings, the forward one uses estimates of future earnings.
7.
One advantage of earnings yields over price/earnings ratios is that we can use them to compare investments in other classes.
True. This way, we can compare the returns that the different types of investments offer.
