Forward P/E and Trailing P/E - What are They, and why are They Important?
JULY 18, 2022
A relative valuation is based on different multipliers to estimate a company's value. One of the multipliers is the profit multiplier. This article will explain what a profit multiplier is, what it is used for, and the difference between Forward P/E and Trailing P/E. The earnings multiplier is the ratio between a share price and earnings per share. A profit multiplier of 10 means it will take an investor 10 years to recoup the investment.
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