This is one of the ways to estimate the intrinsic value of business based on their book value and their earnings power.

FORBES: Graham Number and Warren Buffett Portfolio

Unlike the valuation methods based on book value alone, it takes into account the earnings power.

FORBES: Graham Number and Warren Buffett Portfolio

Last week, it felt as if this scenario was beginning to be tested as investors seemed to begin to value stocks not on recession earnings, but rather on normalized earning power over the next recovery cycle.

FORBES: Manic Depression To Normalization