1. Discuss the general factors that influence the quality of a company's reported earnings and its balance sheet.
2. Why would you anticipate a lower P/E ratio for a typical natural gas utility than for a computer technology firm, such as Dell Computer?
3. Many large corporations, such as General Motors, have written off large amounts of their nonperforming (or poorly performing) assets as they have shrunk their operations. What is the impact of these asset write-offs on the future return on assets, future return on common equity, and future financial leverage ratios? What impact would you expect these write-offs to have on the market value of the firm's equity securities? Why?