Corner Books has sales of $687,400, cost of goods sold of $454,200, and a profit margin of 5.5 percent. The balance sheet shows common stock of $324,000 with a par value of $5 a share, and retained earnings of $689,500. What is the price-sales ratio if the market price is $43.20 per share?

a. 4.28b. 12.74c. 6.12d. 4.07e. 14.51

Question

Business

Cali Rivera

10 September, 20:45

Corner Books has sales of $687,400, cost of goods sold of $454,200, and a profit margin of 5.5 percent. The balance sheet shows common stock of $324,000 with a par value of $5 a share, and retained earnings of $689,500. What is the price-sales ratio if the market price is $43.20 per share?

a. 4.28b. 12.74c. 6.12d. 4.07e. 14.51

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Answers (1)

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Carmen Hudson · Answer 1

d. 4.07

Explanation:

Price-sales ratio = Share market price / Sales per share

Share market price is given = $43.20

Sales per share will be calculated as follow;

Number of shares ($324000 / $5) = 64800 shares

Thus, sales per share ($687400 / 64800) = $10.61

Now, let's put the values in above given formula;

Price-sales ratio = $43.20 / $10.61

= 4.07