Botox Facial Care had earnings after taxes of $304,000 in 2012 with 200,000 shar

Question

Botox Facial Care had earnings after taxes of $304,000 in 2012 with 200,000 shares of stock outstanding. The stock price was $82.40. In 2013, earnings after taxes increased to $394,000 with the same 200,000 shares outstanding. The stock price was $96.00.

Compute earnings per share and the P/E ratio for 2012. (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.)

Compute earnings per share and the P/E ratio for 2013. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

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

by percent while EPS by percent.

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.) (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Explanation / Answer

PE ratio changed because the stock outstanding remained same but the price has not increased with the huge percentage as compared to the earnings  

Particulars 2012 2013 Earning After Taxes 304000 394000 Stock Outstanding 200000 200000 EPS 1.52 1.97 Price 82.4 96 PE Ratio 54.21052632 48.730964

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