# 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.)

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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.)

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Step 1
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
1. 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...

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