Are current earning a useful heuristic for forecasting a fut

Are current earning a useful heuristic for forecasting a future firm performance?

Solution

yes

the current earning of a firm is usefull for the forecasting a future firm perfomance.

Earnings forecasts are based on analysts\' expectations of company growth and profitability. To predict earnings, most analysts build financial models that estimate prospective revenues and costs.

to predict revenues, analysts estimate sales volume growth and estimate the prices companies can charge for the products. On the cost side, analysts look at expected changes in the costs of running the business. Costs include wages, materials used in production, marketing and sales costs, interest on loans, etc.
there are some forecasting techniques to find the firms future perfomance like qualitative and quantitativ techniques, time series, using past data trends, performance analysis,market research,using current trends,moving averages,exponentail smoohing,regression analysis...etc by using these technique we can forecast the future firm perfomance from current earnings