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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.
Profit margin is a widely used measure in business. It measures earnings compared to _______.
Sales. Profit margin compares earnings to sales, where the earnings are either before taxes or after.
3.
A high inventory turnover ratio indicates that _______.
A company is managing its inventory efficiently. It is a measure of a company's success with inventory.
4.
A low price-to-book (P/B) ratio means _______.
Less than 1. Mathematically, it means less than 1.
5.
Poor dividend payment on a company's part indicates that it will perform poorly in the future.
False. In many cases, companies reinvest their earnings to finance future growth. Such companies may actually do quite well in the future.
6.
Which of the following can beta do for you as a stockholder?
Help you pick stocks with the volatilities that are best for you. Although beta can help you with many other issues down the road, its most important role is to help you pick stocks on the basis of volatility.
7.
Balance sheets balance _______.
Assets with liabilities. Equity, debt, taxes, and income are all included in assets and liabilities.