Question

Mustaine, inc., has a current stock price of $54. for the past year, the company had net income of $7,900,000, total equity of $26,300,000, sales of $50,500,000, and 4.1 million shares of stock outstanding. requirement 1: what are earnings per share? (do not round intermediate calculations. round your answer to 2 decimal places (e.g., 32.16).) earnings per share $ 1.93 requirement 2: what is the price-earnings ratio?

Answer 1

(a) Earnings per share = Net income/ total number of shares

Net Income = 7,900,000

Total number of shares = 4.1 Million = 4,100,000

Earnings per share = 7,900,000/4,100,000 = $1.9268/share

Earnings per share = $1.93/share (Rounded to 2 decimals)

(b) Price earnings ratio = Price per share/ Earnings per share

Price per share= $54

Earnings per share = $1.9268

Price earnings ratio = 54/1.9268 = 28.03