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Give a general explanation of why the p or e changed

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Question

California Accessories Company had earnings after taxes of $360,000,000 in 2013 with 28,000,000 shares of stock outstanding.

The stock price was $342. In 2014, earnings after taxes increased to $425,000,000 with the same 28,000,000 shares outstanding.

The stock price was $461.00. In 2015, earnings after taxes declined to $215,000,000 with the same 28,000,000 shares outstanding.

The stock price declined to $317.30.

a. Compute earnings per share and the P/E ratio for 2013.

b. Compute earnings per share and the P/E ratio for 2014.

c. Compute earnings per share and the P/E ratio for 2015.

d. Give a general explanation of why the P/E changed.

You might want to consult the textbook to explain this surprising result.

Reference no: EM131915234

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