Question: Botox Facial Care had earnings after taxes of $320,000 in 20X1 with 200,000 shares of stock outstanding. The stock price was $39.80. In 20X2, earnings after taxes increased to $388,000 with the same 200,000 shares outstanding. The stock price was $50.00.
a. Compute earnings per share and the P/E ratio for 20X1. (The P/E ratio equals the stock price divided by earnings per share.) (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
b. Compute earnings per share and the P/E ratio for 20X2. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
c. Why did the P/E ratio change? (Do not round intemediate calculations. Input your answers as percents rounded to 2 decimal places.)