Problem 2-18 (Static) Price-earnings ratio [LO2-2]

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. Note: Do not round intermediate calculations. Round your final answers to 2 decimal places. b. Compute earnings per share and the P/E ratio for 202. Note: Do not round intermediate calculations. Round your final answers to 2 decimal places. \begin{tabular}{|ll|} \hline Earnings per share & \\ \hline P/E ratio & times \\ \hline \end{tabular} c. Why did the P/E ratio change? Note: Do not round intermediate calculations. Input your answers as percents rounded to 2 decimal places