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 price declined to $27.80.

a. Compute earnings per share and the P/E ratio for 2013.

b. Compute earnings per share and the P/E ratio for 2014.

c. Give a general explanation of why the P/E changed. You might want to consult the textbook to explain this surprising result.