What Is Book-To-Market Ratio?
The price-to-book ratio is the share price divided by the book value per share ratio. The book-to-book ratio = market value / book value. Because the book value reflects historical cost, the P / B ratio is a comparison of the company's investment market value relative to cost. Less than 1 indicates that the company has not effectively created the value that shareholders should have
P / B ratio
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- The price-to-book ratio is the share price divided by the book value per share ratio. The book-to-book ratio = market value / book value. Because the book value reflects historical cost, the P / B ratio is a comparison of the company's investment market value relative to cost. Less than 1 indicates that the company has not effectively created the value that shareholders should have