Price To Book Value Ratio

The price to book value ratio or pbv ratio compares the market and book value of the company.

Price to book value ratio. The price to book p b ratio is widely associated with value investing. Imagine a company is about to be liquidated. The price to book ratio formula is calculated by dividing the market price per share by book value per share. It compares the market value of a company to the book value of each of its shares.

The price to book value compares the current market price of the share with its book value as calculated from the balance sheet. What is the price to book p b ratio. It s calculated by dividing the company s stock. The price to book p b value ratio is an important measure that is used to value a company s stock.

Price to book value ratio price per share book value per share. Like the price to earnings p e ratio a low p b ratio isn t always indicative of an undervalued company. Price to book value ratio is one of the relative valuation tools used to measure stock valuation. Price to book value p b is the ratio of the market value of a company s shares share price over its book value of equity.

It sells of all its assets and pays off all its debts. Companies use the price to book ratio p b ratio to compare a firm s market capitalization to its book value. Price to book ratio market price per share book value per share for example a stock with a pvb ratio of two means that we pay 2 for every 1 of book value.

Price to book ratio p b ratio is calculated by dividing a company s share price by the book value per share. The book value of equity in turn is the value of a company s assets. The logic behind the ratio is to compare the value of a.