Question

Jupiter Explorers has $9,200 in sales. The profit margin is 3 percent. There are 4,400 shares of stock outstanding, with a price of $1.50 per share. What is the company's price–earnings ratio?

Answer 1

Price-earning ratio=23.9234

Step-by-step explanation:

First we will calculate the earning per share:

Earning Per share=(Sales*Profit Margin)/Total shares

Sales=$9,200

Profit Margin=3%=0.03

Total Shares of Stock=4,400

Earning Per share=($9,200*0.03)/4400

Earning Per share=$0.0627

`Price\ -\ Earning\ Ratio=(Market\ Price)/(Earning\ Per\ share)`

Market Price per share=$1.50

Price-earning ratio=
`(\$1.50)/(\$0.0627)`

Price-earning ratio=23.9234