Answer:
Price -sales ratio = 2.01
Step-by-step explanation:
Given that:
Annual sales for a firm = $350045
Profit Margin = 4.5% = 0.045
Outstanding stock = 14000 shares
Current price of stock = $45 per share
The objective is to determine the price - sales ratio.
In order to determine that ; we have:
The net profit = Profit Margin × Annual Sales
The net profit = 0.045 × $350045
The net profit = $15752.025
Earnings Per Share =Net income/shares
Earnings Per Share = $ 15752.025/14000 shares
Earnings Per Share = $ 1.125 per shares
The price earning ratio = Price/Earnings Per Share
Price = The price earning ratio × Earnings Per Share
Price = 45 × 1.125
Price = $50.625
Sales per share = Sales/ Share
Sales per share = 350,045/14000
Sales per share = $25.00
Finally; the price-sales ratio is:
Price -sales ratio= Price/Sales per share
Price -sales ratio= 50.25/25.00
Price -sales ratio = 2.01