In: Finance
"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?"
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)