A firm has annual sales of $350,045, with a profit margin of 4.5 percent. There are 14,000 shares of stock outstanding with a current price of $45 per share. What is the price-sales ratio?

Price -sales ratio = 2.01

Explanation:

Given that:

Annual sales for a firm = $350045

Profit Margin = 4.5% = 0.045

Outstanding stock = 14000 shares

Current price of stock = $45 per share

The objective is to determine the price - sales ratio.

In order to determine that ; we have:

The net profit = Profit Margin × Annual Sales

The net profit = 0.045 × $350045

The net profit = $15752.025

Earnings Per Share =Net income/shares

Earnings Per Share = $ 15752.025/14000 shares

Earnings Per Share =  $ 1.125 per  shares

The price earning ratio  = Price/Earnings Per Share

Price = The price earning ratio × Earnings Per Share

Price = 45 ×  1.125

Price = $50.625

Sales per share = Sales/ Share

Sales per share =  350,045/14000

Sales per share = $25.00

Finally; the price-sales ratio is:

Price -sales ratio= Price/Sales per share

Price -sales ratio= 50.25/25.00

Price -sales ratio = 2.01