A firm's earnings per share increased from $10 to $12, dividends increased from $4.00 to $4.80, and the share price increased from $80 to $90. Given this information, it follows that

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The P/E ratio is calculated as the share price divided by earnings per share. Initially, it was $80/$10 = 8, and then it became $90/$12 = 7.5. Thus, the P/E ratio decreased.

A Firm's Earnings Per Share Increased from $10 to $12