Question

Using the Internet, find Earnings Per Share and Price/Earnings ratio information for two competing publicly traded companies for March 2020. State what you have found and provide a couple of sentences of explanation as to what those ratios tell you about the firms. Finally, provide some analysis of which firm you think would be the better investment, based on this information.

Answer 1

Let's compare the EPS of the tech giants Microsoft and Apple

MICROSOFT CORPORATION-

EPS-5.74$

MP-158.84$

Therefore P/E ratio -27.67

APPLE INC.-

EPS-12.66$

MP-242.21

Therefore P/E ratio -19.13

Earnings per share (EPS) is a figure describing a public company's profit per outstanding share of stock, calculated on a quarterly or annual basis. EPS is arrived at by taking a company's quarterly or annual net income and dividing by the number of its shares of stock outstanding.

The Price to earnings ratio indicates the expected price of a share based on its earnings. As a company's earnings per share being to rise, so does their market value per share. A company with a high P/E ratio usually indicated positive future performance and investors are willing to pay more for this company's shares.

Therefore with this information ,it would be better to invest in Apple.inc