Answer:
Price earning ratio is 16
Explanation:
Profit Margin = (Net profit / Net Sales) x 100
7.5% = Net profit / $220,000
Net Profit = $220,000 x 7.5%
Net Profit = $16,500
Earning Per share = $16,500/ 10,000 = $1.65 per share
Price-sales ratio = Market value / Sales value
1.20 = Market value / 220,000
1.20 x 220,000 = Share price
Share price = 264,000 / 10,000 =
Share price = 26.40
Price Earning Ratio = 26.40 / 1.65 = 16
