Price-To-Book Ratio (P/B Ratio)
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:
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. Related Terms:
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
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