Question: Assume for Botox Facial Care discussed in Problem 18 that in 2011, earnings after taxes declined to $140,000 with the same 200,000 shares outstanding. The

Assume for Botox Facial Care discussed in Problem 18 that in 2011, earnings after taxes declined to $140,000 with the same 200,000 shares outstanding.

The stock price declined to $24.50.

a. Compute earnings per share and the P/E ratio for 2011.

b. Give a general explanation of why the P/E changed. You might want to consult the textbook discussion of price-earnings ratios to explain this surprising result.

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