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MTH 154 VCC PE Ratios and Stock Quotes Worksheet

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Virginias Community College
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Section 2.4 Financial Literacy Objective 1 – Understand PE Ratios and Stock Quotes Objective 2 – Understand Inflation and the CPI Objective 3 – Compute Money Ratios for Retirement Objective 1 – Understand PE Ratios and Stock Quotes Key Terms PE ratio Stock Dividends Share Price per share Retirement plan Quarter Earnings Profit Earnings per share Stock quote Summary A share of stock in a company refers to a part ownership in the company. You can thus become part owner of any publicly traded company by buying shares using a brokerage account like TD Ameritrade or e-trade. On October 22, 2018 you could have bought one share of Apple Copyright © 2020 Pearson Education, Inc. 95 Incorporated for $220.65 at the close of the trading day (4:00 PM EST), or one share of Amazon for $1,789.30. Why the big difference in price? There are several reasons: 1. Every company has a different number of shares for purchase: 487.7 million shares of Amazon and 4.8 billion shares of Apple. So fewer shares can contribute to higher price. 2. Every company makes a different amount of profit each year. This is reported as earnings per share: $11.53 earnings per share (EPS) for Apple and $11.01 earnings per share for Amazon. 3. Finally, every company has different projections for growth. A more robust growth outlook will lead to a higher share price now. Companies exist to make money, (i.e. profit). This may sound strange to you. Apple makes phones and computers, but if they are not pro ...
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