What is a key assumption when forecasting a company's share price using its EPS?

When forecasting a company's share price using its Earnings Per Share (EPS), a key assumption made is that the Price-to-Earnings (P/E) ratio remains fixed. This assumption is critical because the P/E ratio is used to determine the market value of a company's share based on its earnings.

If one considers a stable P/E ratio, then any changes in EPS can directly translate to predictable changes in share price. For instance, if a company's earnings increase, maintaining the same P/E ratio means the share price will proportionally increase as well. This relationship allows analysts and investors to make informed projections about future stock prices based on expected earnings.

The other options do not represent key assumptions used in such forecasting. Debt levels, for example, can significantly influence a company's financial health and its respective P/E ratio. Moreover, considering that market conditions can fluctuate, an assumption that they will reverse is not foundational for this type of forecasting. Lastly, the notion that sales growth is indefinite does not hold since most companies experience cycles of growth and contraction, making it an unreliable base for assumptions in EPS-based forecasts.