Definition of "EPS/T-Bill Yield Ratio"

Monthly ratio of the Standard & Poor's (S & P) 500 earnings per share yield to the 3 month Treasury bill yield. It is calculated by dividing the latest 12 month earnings per share of the S&P 500 Index by the index's monthly average price for the current month. This will determine "earnings yield." Once the earnings yield is obtained, it is divided by the average 3 month T-bill yield for the same time period. If the ratio is 1.2 or greater, it is considered a good time to buy stocks. If the ratio is .9 or lower, it is considered a good time to sell stocks.