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1.
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.
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.
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.
4.
An advantage to using the price/sales ratio is that sales are cut-and-dried.
True. Sales are more straightforward and harder to manipulate than earnings.
5.
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.
6.
The value of a stock's price/earnings ratio could be described as _______.
How much you are willing to pay for the company's earnings. This is what P/E boils down to, practically speaking. The higher the P/E ratio, the more that you are generally willing to pay for the earnings that the company generates.
7.
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.
