Analysis Beginner: Tools and Tips to Evaluate Investments

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1.
Taxes are among the expenditures on an income statement.
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True. Taxes are subtracted from income.
2.
There are reasons why a low price-to-book ratio may not be a good thing for investors. Which of the following is not one of those reasons?
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The company is earning a high return on its assets. This is actually a good thing for investors.
3.
Which source of company information includes the costs of producing the company's goods?
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The income statement. This statement includes income and costs.
4.
Fixed asset turnover measures _______.
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The amount of sales a company generates from its fixed assets. It is used as a measure of sales success.
5.
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 ________.
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Recession. A recession may lower earnings.
6.
Profit margin is a widely used measure in business. It measures earnings compared to _______.
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Sales. Profit margin compares earnings to sales, where the earnings are either before taxes or after.
7.
Which of the following can beta do for you as a stockholder?
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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.