Price-To-Book Ratio - P/B Ratio

What does it Mean? A ratio used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share.

Also known as the "price-equity ratio".

Calculated as:

Price-To-Book Ratio (P/B Ratio)
Investopedia Says... A lower P/B ratio could mean that the stock is undervalued. However, it could also mean that something is fundamentally wrong with the company. As with most ratios, be aware that this varies  by industry.

This ratio also gives some idea of whether you're paying too much for what would be left if the company went bankrupt immediately.

Terms Related Links

Book Value
Carrying Value
Impaired Asset
International Equity Style Box
Market Capitalization
Market Value
Price Multiple
Price to Tangible Book Value - PTBV
Price-Earnings Ratio - P/E Ratio
Value Investing

Terms Related Links
Value By The Book - The P/B ratio can be an easy way to determine a company's value, but it isn't magic!

Analyze Investments Quickly With Ratios - Make an informed decision about your investments with these easy equations.

Digging Into Book Value - This calculation will serve up your portion of the shareholder pie.

Fundamental Analysis: A Brief Introduction To Valuation - Learn the basics to finding the numerical worth of a company you want to invest in.

How Buybacks Warp The Price-To-Book Ratio - Relying on price-to-book can get ugly if a company has repurchased stock. Learn why.

Ratio Analysis Tutorial - If you don't know how to evaluate a company's present performance and its possible future performance, you need to learn how to analyze ratios.

Investment Valuation Ratios: Price/Book Value Ratio - This ratio indicates, how much shareholders are paying for the company''s net assets. See this section for an indepth look at this ratio and its calculation.

What's the difference between book and market value?




add investopedia foot
www.investopedia.com