I'm not sure where I got this info but I jotted down a quick note in my elan guide (and it wasnt from there, obviously) that if Earnings are expected to grow/ increasing, the leading P/E will be < than Trailing.
Again not sure where I got this from but there was a question on the CFAI mock asking which PE is larger based on the figures given and I just guessed it based on the assumption above, without the calc and it was the correct answer
Is this alway's the case or was it a coincidence? Question # 88 CFAI Morning Session.
Edited 1 time(s). Last edit at Thursday, May 27, 2010 at 02:15AM by njlevel10610.作者: chetan86 时间: 2011-7-11 18:17
I think it is a coincidence that you got that question correct. If a company that is expected to experience negative earnings growth in the future, the trailing P/E will be lower than the leading P/E. This is because its present earnings are greater than its future earnings.作者: JGovender 时间: 2011-7-11 18:17
Just found where I got that statement from. Volume 5 CFAI book-bottom of pg 199.
Does that make sense to you, esp with the answer on the mock exam?作者: Bluetick1010 时间: 2011-7-11 18:17
I doubt if its a co-incidence. (unless i am missing something)
Forward P/E ratio = Px Per Share / Earnings per share in next year
If earnings are expected to rise & Px Per Share is constant, P/E Ratio will decrease, compared to current one..
