Question 364 PE ratio, Multiples valuation
Which firms tend to have high forward-looking price-earnings (PE) ratios?
(a) Illiquid small private companies.
(b) Exchange-listed companies operating in stagnant industries with negative growth prospects.
(c) Exchange-listed companies expected to have temporarily high earnings over the next year, but with lower earnings later.
(d) Exchange-listed companies operating in high-risk industries with very high required returns on equity.
(e) Exchange-listed companies whose assets include a very large proportion of cash.