Problem:
Stilley Corporation had earnings after taxes of $436,000 in 2013 with 200,000 shares outstanding. The stock price was $42.00. In 2014, earnings after taxes declined to $206,000 with the same 200,000 shares outstanding. The stock prices declined to $27.80
Required:
Question 1: Compute earnings per share and the P/E ration for 2013
Question 2: Compute the earnings per share and P/E ratio for 2014
Question 3: Give a general explanation of why the P/E changed.
Explain in detail and also show all work.