- Tax Planning
- Investments 1: Before you Invest
- Investments 2: Your Investment Plan
- Investments 3: Securities Market Basics
- Investments 4: Bond Basics
- Investments 5: Stock Basics
- Investments 6: Mutual Fund Basics
- Investments 7: Building Your Portfolio
- Investments 8: Picking Financial Assets
- Investments 9: Portfolio Rebalancing and Reporting
- Retirement 1: Basics
- Retirement 2: Social Security
- Retirement 3: Employer Qualified Plans
- Retirement 4: Individual and Small Business Plans
- Estate Planning Basics
Case Study #3 Answer
Divide the price per share by the earnings per share to calculate the respective PE ratios. PE ratios are normally computed with an (x) after them to denote “times”
a. The historical PE is $85/$4.5 or 18.9x.
b. The forecast or forward PE ratio is $85 / $5 or 17.0x.
c. Assuming prospects decline for next year, the forecast or forward PE ratio would be $85/4 or 21.3x.
