ACTIVITY 2F: BIG, BIG NUMBERS
Description
Students use current price, number of shares outstanding, and latest annual earning to calculate earnings per share and market capitalization.
Math Objectives
The student will be able to:
• Divide two numbers and get a decimal answer
• Multiply a whole number by a decimal
• Use a formula to solve a problem
• Round decimals to the nearest hundredth
• Interpret and apply information from a table
Stock Market Concepts
Annual Earnings
Earnings per Share
Market Capitalization
Shares Outstanding
Stock Prices
Connections and Extensions
Math: Students express Number of Shares Outstanding, Latest Annual Earnings, and Market Cap in expanded form and scientific notation.
Students read answers for Market Capitalization aloud.
Writing: Students respond to the prompt, “When researching a stock would you rather invest in a company with a high or low EPS? Why?”
Students respond to the prompt, “If a company loses money, how will that effect the EPS? Explain your answer in a paragraph.”
Guest Speaker: Invite a stockbroker to visit the class and share additional information about Earnings per Share and Market Capitalization.
Stock Market Concepts: Students classify the companies using their market capitalization values as large, middle, or small cap using the following classifications:
Small Cap = 250 million – 1 billion
Mid Cap = 1 billion – 5 billion
Large Cap = 5 billion – 25 billion (and up)
ACTIVITY
Detailed stock quotes provide more information about a stock than the newspaper. Earnings per share (EPS) is a company’s total profit or earnings divided by the number of shares outstanding. Market capitalization (Market Cap) is the current market value of all outstanding shares of the company. It is calculated by multiplying the stock’s current price by the number of shares outstanding.
Use the following formulas to find the EPS and Market Cap of each stock. Round answers to the nearest cent or hundredth. Complete the table with your answers. Show your work on a separate sheet of paper.
Earnings per Share = Latest Annual Earnings ÷ Number of Shares Outstanding
Market Cap = Number of Shares Outstanding x Current Stock Price
Hint: Convert large numbers into expanded format (1.2 million = 1,200,000) before performing the calculations.
| Number of Shares Outstanding | Current Price |
Latest Annual Earnings | Earnings per Share | Market Cap | |
|---|---|---|---|---|---|
| 1 | $8.4 million | $32.41 | $12.4 million | ||
| 2 | $78 million | $21.65 | $66.3 million | ||
| 3 | $2 billion | $18.26 | $603 million | ||
| 4 | $371 million | $9.77 | $89 million | ||
| 5 | $471.2 million | $16.34 | $735 million | ||
| 6 | $150 million | $33.52 | $306 million | ||
| 7 | $52 million | $26.78 | $92 million | ||
| 8 | $564 million | $8.07 | $676.8 million | ||
| 9 | $90 million | $10.19 | $32.4 million | ||
| 10 | $821 million | $19.23 | $525.4 million |
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