Benjamin Graham formula

Hello, little one! Today let's talk about the Benjamin Graham Formula, which is a way to figure out how much a company is worth.

Now imagine you have a toy, and you want to know how much it's worth so you can sell it. The Benjamin Graham Formula uses a few different numbers to help figure out the toy's value.

First, you need to know how much money the toy is making. This is called the "earnings per share." It's like how much allowance you get every week.

Next, you look at the price you want to sell the toy for. This is called the "stock price." It's like you telling your friend how much you want them to pay for your toy.

Then, you use a special number called the "Price to Earnings Ratio" or "P/E Ratio" to figure out how much the toy is worth. This is like how many toys your friend can buy with their allowance.

The Benjamin Graham Formula tells you the maximum price you should pay for a stock based on its earnings per share, the P/E ratio, and some other factors. It's like figuring out how many toys you can buy with your allowance, but making sure you don't spend too much.

So, in summary, the Benjamin Graham Formula helps us figure out how much a company is worth by looking at how much money they're making, how much the stock costs, and a special number called the P/E ratio. It's like figuring out how much your toy is worth by looking at how much money it makes and how much your friend is willing to pay for it.