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The Meat Market has $747,000 in sales. The profit margin is 4.1 percent and the firm has 7,500 shares of stock outstanding. The market price per share is $22. What is the price-earnings ratio
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The Meat Market has $747,000 in sales. The profit margin is 4.1 percent and the firm has 7,500 shares of stock outstanding. The market price per share is $22. What is the price-earnings ratio

User Helton Malambane
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1 Answer

6 votes

Answer:

The price-earnings ratio= 5.4 times

Step-by-step explanation:

The price earning ratio is used to compare the price of company's share to its earnings.

EPS = Total earnings available to ordinary shareholders/Number of shares

Total earnings available = Profit margin × Sales = $30,627

Earnings per shares = $30,627 /7.500 = $4.0836

The price-earnings ratio = Price/EPS= 22/4.0836 =5.38

The price-earnings ratio= 5.4 times

User Whitwhoa
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