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?
A)14
B)16
C)18
D)20
E)22

Question

Quizplus · Accepted Answer

Price per share = 1.20 F1F1F1S1F1F1F10 ($220,000/10,000) = $26.40Earnings per share = ($220,000 F1F1F1S1F1F1F10 .075)/10,000 = $1.65Price-earnings ratio = $26.40/$1.65 = 16

Lassiter Industries Has Annual Sales of $220,000 with 10,000 Shares