Jupiter explorers have $8,200 in sales. the profit margin is 5 percent. there are 5,200 shares of stock outstanding. the market price per share is $1.70. what is the price-earnings ratio
Price per earnings ratio is calculated as Price of each share in the market/Earnings made on each share over the last 4 quarters. (P/E)
P = $ 1.70
Earnings per share = Net income/Outstanding shares
Net income = Revenue - Costs = profit margin =5%*8200= $410
Therefore Earning per share = 410/5200 = $0.078
P/E ratio = 1.7/0.078 = 21.5
