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1.
Low earnings can make a price/earnings ratio very high. This fact may not mean that the company is overvalued. Instead, there may simply be an industrywide ________.
Recession. A recession may lower earnings.
2.
Return on equity is a measurement that stock investors watch closely. It measures ________ compared to equity.
Earnings after taxes. In other words, return on equity measures what a company is earning for stockholders.
3.
Asset utilization ratios are used to _______.
Determine how a company manages its assets. Ultimately, asset utilization ratios help to measure a company's efficiency.
4.
A low price-to-book (P/B) ratio means _______.
Less than 1. Mathematically, it means less than 1.
5.
If a company with a beta of 3.0 is expected to get a return of 15 percent, what can we expect the return of the overall market to be?
5 percent. A beta of three indicates three times the earnings possibility of the overall market. Thus, the overall market's return would be only one-third that of our company.
6.
Which source of company information includes the costs of producing the company's goods?
The income statement. This statement includes income and costs.
7.
Balance sheets balance _______.
Assets with liabilities. Equity, debt, taxes, and income are all included in assets and liabilities.