How this calculator works
Calculate the square-root valuation screen combining positive earnings and book value per common share. The constant 22.5 comes from multiplying a P/E ceiling of 15 by a price-to-book ceiling of 1.5. The result is one historical screening measure, and does not establish a company's fair value or satisfy all of Graham's investment criteria.
Formula
Graham number = sqrt(22.5 × EPS × common book value per share). Price difference = Graham number / current market price - 1. Both EPS and book value must be positive.
Worked example
EPS of $4 and book value of $25 give sqrt(2,250), or $47.4342. EPS of $2 and book value of $20 give $30. At a $24 market price, that second screen is 25% above market.
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Frequently asked questions
Is this the Graham growth formula?
No. This screen combines earnings and book value. The intrinsic value page offers a separate historical growth-and-bond-yield formula.
Can I enter negative book value?
No. Two negatives could produce a real square root but would not be a meaningful application of this positive-earnings screen.
Does a number above price mean I should buy?
No. Accounting quality, business prospects, debt and other criteria still matter. A single historical threshold is not an investment recommendation.