Ask Question
28 March, 18:32

14. Lassiter Industries has annual sales of $220,000 with 10,000 shares of stock outstanding. The firm has a profit margin of 7.5 percent and a price-sales ratio of 1.20. What is the firm's price-earnings ratio?

+4
Answers (1)
  1. 28 March, 18:40
    0
    Price earning ratio is 16

    Explanation:

    Profit Margin = (Net profit / Net Sales) x 100

    7.5% = Net profit / $220,000

    Net Profit = $220,000 x 7.5%

    Net Profit = $16,500

    Earning Per share = $16,500 / 10,000 = $1.65 per share

    Price-sales ratio = Market value / Sales value

    1.20 = Market value / 220,000

    1.20 x 220,000 = Share price

    Share price = 264,000 / 10,000 =

    Share price = 26.40

    Price Earning Ratio = 26.40 / 1.65 = 16
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “14. Lassiter Industries has annual sales of $220,000 with 10,000 shares of stock outstanding. The firm has a profit margin of 7.5 percent ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers