Earnings per share is used in calculating another ratiothe price-earnings ratio. It is obtained by dividing the
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Earnings per share is used in calculating another ratio—the price-earnings ratio. It is obtained by dividing the average market price of the stock by the earnings per share. If the average market price for Chico Company stock during 2009 was $50, then the price-earnings ratio is the ratio of $50 to $6.25, or to 1.
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