Jupiter Explorers has $7,600 in sales. The profit margin is 3 percent. There are 5,100 shares of stock outstanding. The market price per share is $1.30. What is the price-earnings ratio?A. 29.08B. 5.81C. 6.63D. 27.51E. 14.54

Price-earnings ratio = 29.0789 rounded off to 29.08

Option a is the correct answer.

Explanation:

The price earnings ratio or price earnings multiple is the measure of how much the investors are willing tp pay in price per share for $1 of earnings per share provided by the company.  The price earnings ratio can be calculated as follows,

Price earning ratio =  Price per share / Net Income per share or earnings per share

First we calculate net income to be = 7600 * 0.03 = $228

The net income per share = 228 / 5100 = $0.04470588235 per share

The price per share = 1.3

Price-earnings ratio = 1.3 / 0.04470588235

Price-earnings ratio = 29.0789 rounded off to 29.08

1. c

2. b

3. a

4. c

5. a

6. b

7. c

8. c

9.b

10. d

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