Calculator
Definition – What is the Graham Number?
The Graham Number is considered by some investors as the upper limit for what an investor should pay for a stock.
Formula – How to calculate the Graham Number
Graham Number = √(22.5 x Earnings per Share x Book Value per Share)
Example
A stock has earnings per share of $2.50 and a book value per share of $17.92.
Graham Number = √(22.5 x 2.5 x 17.92)
Graham Number = √1008
Graham Number = 31.75
Therefore, this stock’s Graham Number is 31.75.
Sources and more resources
- Wikipedia – Graham number – Wikipedia’s entry on the Graham Number.
- Investopedia – Graham Number – A short article on the Graham number.