Question

Jupiter Explorers has $9,400 in sales. The profit margin is 4 percent. There are 5,400 shares of stock outstanding, with a price of $2.00 per share. What is the company's price–earnings ratio?

Answer 1

Answer:

28.72

Explanation:

A company's price-earnings ratio is determined by its stock price per share divided by the company's earnings per share.

Jupiter Explores has earnings per share of:

$EPS = \frac{\ 9,400*0.04}{5,400}\\ EPS=\ 0.0696296/share$

The price–earnings ratio is:

$PER = \frac{\ 2.00}{\ 0.0696296} \\PER= 28.72$

The company's price–earnings ratio is 28.72.