Question

Jupiter explorers has $7,200 in sales. the profit margin is 4 percent. there are 6,000 shares of stock outstanding. the market price per share is $1.40. what is the price-earnings ratio?

Answer 1

Earnings = Sales * Profit margin = 7200 * 4% = 288

Price to earnings = stock price / earnings per share = 1.40/(288/6000) = $29.17