Tuesday, January 25, 2011

Algebra Used In Real Life

Jim Cramer "Mad Money" explains how (very quickly, you must catch it at 5:30 of the video) ALGEBRA is used in predicting where the price of a stock is going to go!  He states that the Multiple times the Earnings Estimate = Where the stock price is going to go.

You may not care about the stock market or have any plans to be a business person, but once again ALGEBRA is present in every day life.  Watch the video from the beginning or skip to 5:30 to hear Jim talk about this!


So what happened:  Kimberly Clark posted a 14.47 earnings per share or multiple.  We multiple that by the Earnings Estimate of 4.42 and obtain an answer of 63.9574 which is the "Where the price is going to go"  The price right now is $64.14 which means that the price has exceeded the algebraic formula.  However, this could be a quick reaction to good news as there was a slight increase in revenue.  See picture below...

Bottom Line:  Algebra is present and STATED by a person in business!!!
 
Posted by Anonymous at 6:30 AM
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2 comments:

  1. AnonymousJanuary 27, 2011 at 2:08 PM

    that is awesome! it's exciting to see where what we are doing is used in the "real world"

    ReplyDelete
  2. AnonymousJanuary 27, 2011 at 9:25 PM

    Craig, thanks for the comment and the observation! I, too, think it is fantastic to see ALGEBRA being used in a business setting!

    ReplyDelete

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