Sir, if in a question I have been given most recent earnings and forecast earnings, which figure should I use to multiply to the P/E ratio to get the business value? On the ACCA study hub, they have mentioned, "The sector P/E ratio should be applied to the company’s most recent earnings figure rather than forecast earnings. The sector ratio would have been calculated based on most recent published earnings – any expected earnings growth is reflected in the size of the price-earnings multiple itself." However, a question in the Kaplan kit (Prey Co.) has used the forecasted earnings instead of the most recent recorded earnings. Can you please clarify this doubt for me?
Thank you!
ACCA Forums
FMUsing P/E ratio for business valuations
If you want to ask the tutor something directly please use the ask the tutor forum as this forum is primarily designed for students to help one another-
https://opentuition.com/forum/ask-acca-tutor-forums/ask-the-tutor-acca-financial-management-fm-exams/
As you are here, in my personal opinion, I am not sure there is a totally clear answer but I have far more agreement with the ACCA study hub's take on this question. Hope this helps.
I would encourage you to ask the tutor directly using the above link. Hope this helps.
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