Analysis Beginner: Tools and Tips to Evaluate Investments

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1.
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.
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.
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.
4.
If Wilma's Widgets, Inc., earns $5 million after taxes and makes $10 million in sales, what is its net profit margin?
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50 percent. Net profit margin is earnings after taxes divided by sales. In the case of Wilma's Widgets, Inc., that amounts to 0.5, or 50 percent.
5.
Balance sheets balance _______.
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Assets with liabilities. Equity, debt, taxes, and income are all included in assets and liabilities.
6.
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.
7.
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.