Advanced Computing Inc. has sales of $300 million, a net profit margin of 9%, and 10 million shares of common stock outstanding. It has no preferred stock outstanding. If Allied stock trades at $32.40 per share, it has a price/earnings ratio of 12.

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The price/earnings ratio is calculated by dividing the stock price by the earnings per share. The earnings per share is calculated by dividing the net profit by the number of shares outstanding. In this case, the net profit is $300 million * 0.09 = $27 million, and the earnings per share is $27 million / 10 million = $2.70. The price/earnings ratio is $32.40 / $2.70 = 12.