Prospective PE

As investors are primarily interested a company's future profits, it is common to calculate the PE based on forecast earnings.

The PE calculated using the previous financial year's earnings is called the historical PE. The PE based on the current financial year's forecast earnings is called the prospective PE.

Both historical and prospective PEs, and PEs based on another year's earnings may be clearly referred to by specifying the year the earnings of which (actual or forecast) are used: by saying something like "12 times 2008 earnings."

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