B C A D E F G H P-18: Price/earning ratio (LO2) Botox Facial Care had earnings after taxes of $370,000 in 20x1 with 200,000 shares of stock outstanding. The stock price was $31.50. In 20X2, earnings after taxes increased to $436,000 with the same 200,000 shares outstanding. The stock price was $42.00. 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). b. Compute earnings per share and the P/E ratio for 20x2. c. Give a general explanation of why the P/E ratio changed. b) Given: Earnings Shares Price/Share Earn/Share PE Ratio & Price/Share & Earn/Share 20X1 370000 200000 31.50 5 20X2 436000 200000 42.00 16 7 P-19: Price/earning ratio (LO2) Stilley Corporation had earnings after taxes of $436,000 in 20x2 with 200,000 shares outstanding. The stock price was $42.00. In 20x3, 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 20x2. b. Compute earnings per share and the P/E ratio for 20X3. c. Give a general explanation of why the P/E changed; (You might want to consult the textbook to explain this surprising result). On Own 10 Given: Percent Change Change/Original eg (Price2-Price1)/Price