1. The price-earnings ratio for the common stock of Benoit Company was 10 at December 31, the end of the current fiscal year. What does the ratio indicate about the selling price of the common stock in relation to current earnings?
2. Why would the dividend yield differ significantly from the rate earned on common stockholders' equity?
3. Favorable business conditions may bring about certain seemingly unfavorable ratios, and unfavorable business operations may result in apparently favorable ratios. For example, Sanchez Company increased its sales and net income substantially for the current year; yet, the current ratio at the end of the year is lower than at the beginning of the year. Discuss some possible causes of the apparent weakening of the current position, while sales and net income have increased substantially.
4. Indicate the purpose of the Management Discussion and Analysis in a corporation's annual report.