What is the PE ratio for Lab R Doors?

Question

 Lab R Doors' year-end price on its common stock is $55. The firm has a profit margin of 11.5%, total assets of $30 million, a total asset turnover ratio of 2.00, no preferred stock, and there are 4.0 million shares of common stock outstanding. What is the PE ratio for Lab R Doors?

Answer 1

Given assets = $30M

Revenue = asset turnover ratio * assets = 2 * 30 = $60M

Net income or profit = profit margin * revenue = .119 * 60 = $6.9M

Earnings per share = Net income/# of shares = 6.9/4 = $1.725

PE = Stock price/EPS = 55/1.725 = 31.88