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

28.72

Step-by-step 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 = (\$9,400*0.04)/(5,400)\\ EPS=\$0.0696296/share`

The price–earnings ratio is:

`PER = (\$2.00)/(\$0.0696296) \\PER= 28.72`

The company's price–earnings ratio is 28.72.