Analysis Beginner: Tools and Tips to Evaluate Investments

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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 ________.
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Recession. A recession may lower earnings.
2.
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.
3.
A low price-to-book (P/B) ratio means _______.
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Less than 1. Mathematically, it means less than 1.
4.
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.
5.
You will find a company's audited financial statements in its ________.
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Annual report. The annual report contains audited confirmations of its financial statements.
6.
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.
7.
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.