simCEO

Tutorial Contents

• Welcome What is the stock market? Benefits of the market Case Study: Why go public? What makes prices change? Earnings Per Share (EPS) Price to Earnings Ratio (P/E) Quiz 1: EPS and P/E The Growth Factor Quiz 2: Growth Rates The Rational Market Investors' Perceptions Prices Move: A Summary Tutorial Conclusion

Scenarios

• Ready to invest with the pressure on? Try our scenarios

EPS (Earnings Per Share) and the PE Ratio (Price to Earnings)

Select the appropriate bubble by clicking on it with your mouse. There is only one correct answer for each question. You will find out if you were right, immediately.

1. Jerry's Juice Company has 500,000 shares outstanding (available to the public). Listed below are the quarterly EPS for the company.

   Q1	Q2	Q3	Q4
   $.60	$.40	$.75	$.25

   What are the total earnings for the past year?

   	$125,000
   	$1,000,000
   	$2.00
   	$250,000

   
   

2. All other things being equal, it is best to look for a company with a low P/E.

    
   
   

3. Company A has a lower PE than company B. Company B has a higher EPS than company A. Which choice below represents the best thinking?

   	Company A is a better investment due to its lower PE
   	Company B is a better investment due to its higher EPS
   	This information does not allow for a meaningful comparison