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1.
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.
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.
What does a company's price/sales ratio measure?
Its stock's market price divided by its sales per share. As such, it is a very useful ratio for businesses.
4.
The formula for cash return is free cash flow plus net interest expense, the sum of which is then divided by _______.
Enterprise value. Enterprise value is the figure that goes into the denominator.
5.
A company's price/earnings growth ratio uses its stock's current price in the calculation.
False. The ratio uses forward price/earnings ratio, which is a future estimate.
6.
If a stock has a price/earnings ratio of 20, based on a price of $100 and an earnings per share of $5, its earnings yield is _______.
5%. Earnings yield can be gotten by inverting the price/earnings ratio.
7.
In a typical price/book ratio, what exactly is the book value part of it?
The total equity divided by the number of shares outstanding. Altogether, this is the "book value" that purports to show what a share of stock is objectively worth.
