What is the 'Book-To-Market Ratio'
The book-to-market ratio is a ratio used to find the value of a company by comparing the book value of a firm to its market value. Book value is calculated by looking at the firm's historical cost, or accounting value. Market value is determined in the stock market through its market capitalization.
BREAKING DOWN 'Book-To-Market Ratio'
In basic terms, if the ratio is above 1 then the stock is undervalued; if it is less than 1, the stock is overvalued.