Price-to-book ratio or P/B ratio, is 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. Book value is the shareholders' equity (assets minus liabilities) divided by the total number of outstanding shares. The calculation is often done using 'per share' values for both price and book.

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 this varies a fair amount by industry. Industries that require higher infrastructure capital (for each dollar of profit) will usually trade at P/B much lower than the P/B of (e.g.) consulting firms.

This ratio also gives some idea of whether you're paying too much for what would be left if the company went bankrupt immediately. For companies in distress the book value is usually calculated without the intangible assets that would have no resale value. In such cases P/B should also be calculated on a 'diluted' basis, because stock options may well vest on sale of the company or change of control or firing of management.

Also known as the "price/equity ratio" (which should not be confused with P/E or price/earnings ratio); or the market cap divided by shareholders' equity.

Прикольные вещи рассказываете. Увлекательный сайт, по меньшей мере для закладок - то что надобно Прикольные вещи рассказываете. Увлекательный сайт, по меньшей мере для закладок - то что надобно

See alsoEdit

External resourcesEdit

If you want to add personal links, please do that on your user page - you can also write your profile there. If you have a link with great content that persons using Finance Wikia need, you can add it at P/Links

This page uses Creative Commons Licensed content from Wikipedia (view authors). Smallwikipedialogo.png

Ad blocker interference detected!

Wikia is a free-to-use site that makes money from advertising. We have a modified experience for viewers using ad blockers

Wikia is not accessible if you’ve made further modifications. Remove the custom ad blocker rule(s) and the page will load as expected.