ABSTRACT
The steady state relationship can also be used to show by how much earnings per share needs to be increased in order to achieve the share price growth implicit in the current value.
Unsurprisingly, the price/earnings ratio for a company is determined by dividing its current share price by its earnings per share (eps). Thus price/eps P/E. This equation can be rearranged, and so-doing explains, at least partially, a popular misconception about share prices.
