P/B ratio

How many times book value the price is

In detail

The price-to-book ratio is the share price divided by book value per share. It compares the price against what one share would claim if the company were wound up and its assets divided. Below 1 means the market values it under its books. But book value and what assets actually fetch are different things, so a low ratio is not automatically a bargain.

Example

At a price of $800 with book value of $1,000 a share, P/B is 0.8 — trading 20% under book.

Related terms

Book value per share P/E ratio Equity ratio

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For learning, not investment advice. Decisions are your own.