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9 January, 03:35

KBJ has total assets of $613,00. There are 21,000 shares of stack outstanding with a market value of $13 a share. The firm has a profit margin of 6.2 percent and a total asset turnover of 1.08. What is the price-earnings ratio? A) 6.38B) 7.99C) 6.65D) 5.12E) 7.41

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  1. 9 January, 06:28
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    6.65

    Explanation:

    Firstly, we need to calculate company revenue as below;

    Asset turnover = Company revenue/Company Asset = > Company revenue = Company Asset x Asset turnover = 613,000 x 1.08 = 662,040.

    Next, we will calulate company net income as below:

    Net profit margin = Net income/Company revenue = > Net income = Net profit margin x Company revenue = 6.2% x 662,040 = 41,046.48.

    Finally, price-earnings ratio is calulated as below:

    Price-earnings ratio = Stock price/Earning per share = 13 / (41,046.48/21,000) = 6.65
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