"The FIN340 Company has a net profit margin of 8.75% on annual sales of $86,500,000 and...

"The FIN340 Company has a net profit margin of 8.75% on annual sales of $86,500,000 and the firm has 980,000 shares outstanding. If the firm's P/E ratio is 7.2, how much is the stock currently selling for?"

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Expert Solution

Profit margin=Net income/Sales

Net income=86,500,000*8.75%

=$7568750

EPS=Net income/Shares outstanding

=7568750/980,000

=$7.72321429

P/E ratio=stock price/EPS

Hence stock price =$7.72321429*7.2

=$55.61(Approx)

jeff jeffy answered 1 year ago

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