Business

AccountingQ&A LibraryBotox Facial Care had earnings after taxes of $320,000 in 20X1 with 200,000 shares of stock outstanding. The stock price was $39.80. In 20X2, earnings after taxes increased to $388,000 with the same 200,000 shares outstanding. The stock price was $50.00.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.) (Do not round intermediate calculations. Round your final answers to 2 decimal places.) b. Compute earnings per share and the P/E ratio for 20X2. (Do not round intermediate calculations. Round your final answers to 2 decimal places.) c. Why did the P/E ratio change? (Do not round intemediate calculations. Input your answers as percents rounded to 2 decimal places.)Question

Asked Feb 6, 2020

16 views

Botox Facial Care had earnings after taxes of $320,000 in 20X1 with 200,000 shares of stock outstanding. The stock price was $39.80. In 20X2, earnings after taxes increased to $388,000 with the same 200,000 shares outstanding. The stock price was $50.00.**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.) **(Do not round intermediate calculations. Round your final answers to 2 decimal places.) **

**b. **Compute earnings per share and the P/E ratio for 20X2. **(Do not round intermediate calculations. Round your final answers to 2 decimal places.) **

**c. **Why did the P/E ratio change? **(Do not round intemediate calculations. Input your answers as percents rounded to 2 decimal places.) **

Step 1

- a)
**Compute earnings per share and the P/E ratio for 20X1:**

EPS (20X1) = $320,000 / 200,000

= $1.60

P/E ratio (20X1) = Price / EPS

= $39.80 / $1.60

= **24.87**

Therefore, earnings per share are **$1.60** and a P/E ratio for 20X1 is **24.87x**

Step 2

**b) Compute earnings per share and the P/E ratio for 20X2:**

** **

EPS (20X2) = $388,000 / 200,000

= $1.94

P/E ratio (20X2) = Price / EPS

&nb...

Tagged in

Find answers to questions asked by student like you

Show more Q&A

Q: Contributed Capital The following is a partial list of the accounts and ending account balances take...

A: Contributed Capital: Contributed capital is the total amount of cash or assets received by company i...

Q: Instructions: Working capital accounts are current assets and current liabilities. Of the 13 account...

A: Working Capital Working Capital is define as a difference between current assets and current liabili...

Q: Since the SUTA rates changes are made at the end of each year, the available 2019 rates were used fo...

A: Federal unemployment compensation tax (FUTA): This is the compensation provided to the unemployed pe...

Q: Variable and Absorption Costing The following data were adapted from a recent income statement of An...

A: a. Income statement according to the variable costing is prepared as follows: Ending results ar...

Q: On June 1, Cline Co. paid $800,000 cash for all of the issued and outstanding common stock of Renn C...

A: Calculate the value of the net assets:

Q: If Shareholders equity at the beginning of the year was $400,000 and $10,000 was paid to shareholder...

A: Shareholder’s equity: Equity shares held by share holders are called shareholders equity. Each share...

Q: Exercise 1-4 This information relates to Windsor, Inc. for the year 2017. Retained earnings, January...

A: Prepare an income statement of 2017 as shown below:

Q: What effect would each of the following events likely have on the leavel of nominal interest rates? ...

A: Nominal Interest rates implies to the interest rates without considering the inflation. Nominal inte...

Q: On January 1, 2017, Carla Vista Company redeemed $470,000 of bonds at 103. At the time of redemption...

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. Th...