Analysis Beginner: Tools and Tips to Evaluate Investments

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1.
Asset utilization ratios are used to _______.
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Determine how a company manages its assets. Ultimately, asset utilization ratios help to measure a company's efficiency.
2.
Investors who want high returns on investment may want stocks with _______ betas.
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High. The higher the beta, the higher the possible returns.
3.
A low price-to-book (P/B) ratio means _______.
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Less than 1. Mathematically, it means less than 1.
4.
To calculate a stock's price/earnings ratio, divide the present market price of a share by its earnings per share for the last 12 months.
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True. This is the correct way to figure price/earnings ratio.
5.
Poor dividend payment on a company's part indicates that it will perform poorly in the future.
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False. In many cases, companies reinvest their earnings to finance future growth. Such companies may actually do quite well in the future.
6.
Return on equity is a measurement that stock investors watch closely. It measures ________ compared to equity.
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Earnings after taxes. In other words, return on equity measures what a company is earning for stockholders.
7.
Which of the following is not included in a company's statement of cash flow?
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Managing activities. The statement of cash flow does not include this.