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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?

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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:

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

The price–earnings ratio is:

[tex]PER = \frac{\$2.00}{\$0.0696296} \\PER= 28.72[/tex]

The company's price–earnings ratio is 28.72.

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