Financial Terms Glossary

Forward Multiple

Formal

If a company is trading on what is called a 'forward multiple' its shares are valued at a multiple of its prospective earnings rather than the value of its underlying assets. (See also PE ratio.)For example, shares may be valued on a forward multiple of 8 tmes earnings if respectable groth is anticipated.

Informal

Companies can be valued in a number of ways. Forward multiple is a sexy way of saying that the total worth of a company is a multiplier of its projected annual profits. Eg Company A makes $1 Million per annum. Its total value is $10 Million. It has a forward multiple of 10 ($10 Million divided by $1 Million) Easy... now go and impress your friends.

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