Price-to-Book Ratio Calculator

Calculate the price-to-book ratio

The price-to-book ratio, or P/B, compares a company's market value to its book value, the net asset value recorded on its balance sheet. It is calculated by dividing the share price by the book value per share, or equivalently by dividing market capitalisation by total book value. A P/B of one and a half means investors are paying one and a half times the accounting value of the company's net assets. A ratio below one means the market values the company at less than its book value.

Book value per share is a company's total equity divided by the number of shares outstanding.

Interpreting P/B

The price-to-book ratio is most useful for valuing companies with substantial tangible assets, such as banks, insurers and manufacturers, where book value is meaningful. A low P/B can indicate an undervalued stock or a struggling business, while a high P/B suggests the market expects strong future returns on the company's assets, as is common for asset-light technology firms.

P/B has limitations: it understates the value of companies whose worth lies in intangibles like brands and intellectual property, which may not appear fully on the balance sheet. Use it alongside other measures and compare within an industry. All calculation happens locally in your browser.

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