Question

Botox Facial Care had earnings after taxes of $370,000 in 2012 with 200,000 shares of stock outstanding. The stock price was $31.50. In 2013, 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 2012. (The P/E ratio equals the stock price divided by earnings per share.)
b. Compute earnings per share and the P/E ratio for 2013.
c. Give a general explanation of why the P/E ratio changed.



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  • CreatedOctober 14, 2014
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