Question

1. Jupiter Explorers has $9,000 in sales. The profit margin is 5 percent. There are 6,300 shares of stock outstanding, with a price of $1.80 per share. What is the company's price–earnings ratio?

Answer 1

Answer:

25.21

Explanation:

The Price Earnings Ratio explains the correlation between a company’s stock price and earnings per share (EPS).

Calculating the price earning ratio is by the formula below.

PE = share price/ earning per share.

For Jupiter, the share price is $1.80 per

The EPS is as net income/outstanding shares

net income is the profits = 5 % of 9,000

net income = 5/100 x $9000

=0.05 x $9000

=$450

EPS =450/6300

EPS= 0.071

The Price Earnings Ratio= $1.80/0.0714

=25.21