Graham Number Calculator

Formula

The formula to calculate the Graham Number (GN) is:

\[ GN = \sqrt{22.5 \times EPS \times BPS} \]

Where:

$ EPS $ is the earnings per share ($).
$ BPS $ is the book value per share ($).

Example

Let's say the earnings per share ($ EPS $) is $5 and the book value per share ($ BPS $) is $20. Using the formula:

\[ GN = \sqrt{22.5 \times 5 \times 20} \]

We get:

\[ GN = \sqrt{2250} \approx 47.43 \text{ dollars} \]

So, the Graham Number ($ GN $) is approximately $47.43.

What is the Graham Number?

The Graham Number is a metric used to evaluate the highest price an investor should pay for a stock. It is calculated using the book value per share (BVPS) and the earnings per share (EPS) of a particular stock. It helps investors determine if a stock is undervalued or overvalued based on its financial performance.