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Benjamin Graham

The defensive investor's criteria · The Intelligent Investor, 1973, ch. 14

Seven criteria. Two of their tests can be counted across the US market.

Counted 11 Sep 2026. Prices of 10 Sep 2026. Numbers are Graham's unless marked Ours.

  1. Current ratio≥ 2A quarter to a half of the 3,645 US-listed companies with a current ratio meet it.

    A current ratio of at least 2.0, as the first half of his standard for strong financial condition.

    2 sits between the 50th percentile, 1.86, and the 75th, 3.59.

    Who is counted

    Companies with filed statements, one each; exact zeros left out as missing data; banks, equity REITs, insurers and mortgage REITs left out (611); extremes capped at the 1st and 99th percentiles.

    Current ratio benchmarks ›
  2. Price to book≤ 1.5A quarter to a half of the 3,385 US-listed companies with a price to book ratio meet it.

    A price at most 1.5 times the book value last reported.

    1.5 sits between the 25th percentile, 1.12, and the 50th, 2.12.

    Who is counted

    Companies with filed statements, one each; exact zeros left out as missing data; extremes capped at the 1st and 99th percentiles.

    What we changed

    The product's book value is total shareholders' equity as filed, preferred stock included, or a vendor's price-to-book ratio where one is supplied.

    Price to book benchmarks ›
Not measured, and why
  • Adequate size. Stated in 1973 dollars.

    Graham excluded small companies, stating the floor in annual sales for an industrial company and in total assets for a public utility. The floor was stated in the currency of 1973 and has no defensible present-day equivalent.

  • Debt against net current assets. Not computed.

    For industrial companies, long-term debt not exceeding net current assets: the second half of the same balance-sheet standard. The product computes no comparison of long-term debt with net current assets, and debt to equity is not a substitute for it.

  • Ten years of earnings. A streak; no market count.

    Some earnings for the common stock in each of the past ten years. Not average positive earnings across ten years. Each year. This is a streak rather than a ratio, and a streak has no cross-section: there is no percentile of the market at which "eight years out of ten" sits.

  • Twenty years of dividends. We hold ten years.

    An uninterrupted dividend record for at least the past twenty years. Twenty years of history are needed and ten years of fundamentals are held.

  • Ten-year earnings growth. No market count.

    At least a one third increase in per-share earnings over ten years, measured on three-year averages at each end so that a single unusual year at either end cannot decide it. It needs per-share earnings across ten filed years and a three-year average at each end of them.

  • P/E on three years. Ours uses one year.

    A price at most 15 times the average earnings of the past three years. This product holds a multiple against one filed year of diluted earnings per share, and that averaging is not a detail of his test but the point of it: it exists so that a cyclical business cannot qualify on a single good year.

  • The 22.5 rule. No count for the two multiplied.

    The product of the earnings multiple and the book multiple not exceeding 22.5. It is a rule about two ratios multiplied together. The product publishes a cohort for each ratio separately and none for their product, so there is no market-wide breakpoint to place 22.5 against.

Check one stock

Benjamin Graham

Defensive investor

  • Current ratio≥ 2
  • Debt/Equity≤ 1ours: our number or our measure
  • Profit streak≥ 10
  • P/B≤ 1.5ours: our number or our measure
What we changed

A year we cannot read, or the end of our history, leaves the ten-year test not measured.

Each number of ours
  • Debt/Equity: Stands in for his test of long-term debt against net current assets.
  • P/B: His 1.5, run without his 22.5 rule on the two multiples.

Not run: size floor; 20 years of dividends; 10-year earnings growth; P/E on three years of earnings.

Run
How Apple measures

Apple Inc. · AAPL · NASDAQ

  • Defensive investor. Does not meet. 1 meet, 3 do not, 0 not measured.Current ratio 0.89 · Graham: 2 or more

Latest annual filing: fiscal 2025. Prices of 10 Sep 2026. Computed 11 Sep 2026.

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Research tool, not investment advice. Meeting a test is not a reason to buy.

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