Question

A forward PE is based on:

1) The last four quarterly dividend payments
2) The last dividend payment multiplied by 2
3) Historical earnings
4) Estimated future earnings
5) Industry averages

Answer 1

A forward PE is based on estimated future earnings and is used to calculate the price-to-earnings (PE) ratio for a stock. It helps investors assess the valuation of a stock and compare it to others in the same industry.

Step-by-step explanation:

A forward PE is based on estimated future earnings. It is a financial ratio used to calculate the price-to-earnings (PE) ratio for a stock based on the company's projected future earnings. This ratio is calculated by dividing the current market price of the stock by the estimated future earnings per share. The forward PE ratio is often used by investors to assess the valuation of a stock and compare it to other companies in the same industry.