I'm reading the Intelligent Investor and I came across a passage where Graham calculates the 'times earnings' of the DJIA. But is it wrong, or am I misreading it?
Since the market value of these issues is well above their book value—say, 900 market vs. 560 book in mid-1971—the earnings on current market price work out only at some 6 1⁄4%. (This relation- ship is generally expressed in the reverse, or “times earnings,” manner—e.g., that the DJIA price of 900 equals 18 times the actual earnings for the 12 months ended June 1971.)
This must be very simple for you guys, but isn't 'times earnings' supposed to be 900/560 = 1.6? I'm wondering where that 18 came from
(Please let me know if this question belongs in money.stackexchange.com)