On, December 20, a firm ends its fiscal year and records annual net earnings of $40 million, with 15 million shares of common stock outstanding. It's stock price is $35 per share. On December 25, the firm declares a cash dividend of $0.30 per share which will be paid on December 31. At December 31, the dividends are paid and the stock price remains at $35 per share.
By how much does the company's price-to-earnings (P/E) ratio change from December 20 to December 31? Does it increase or decrease?
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