Price-to-Book Ratio Calculator
Find the P/B ratio from price and book value.
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How it works
The price-to-book ratio, or P/B, compares a company's market price to the accounting value of its net assets, and this calculator computes it by dividing the market price per share by the book value per share. Book value is essentially what would theoretically be left for shareholders if the company sold all its assets and paid off all its liabilities at the values recorded on its balance sheet. A P/B of one means the stock trades exactly at book value; above one, investors are paying a premium, typically because they expect growth, profitability, or intangible strengths like brands and patents that accounting does not fully record; below one, the market values the company at less than its stated net worth, which value investors sometimes see as a bargain and others as a warning of trouble. P/B is especially useful for asset-heavy businesses such as banks, insurers, and industrial firms, where book value closely tracks real economic value, and far less useful for asset-light technology or service companies whose worth lies mostly in intangibles. Benjamin Graham and generations of value investors have used low P/B as a screen for undervalued stocks. Enter the two figures to get the ratio.
P/B = market price per share / book value per share
The price-to-book ratio divides a stock's market price per share by its book value per share, comparing what investors will pay against the net accounting value of the company's assets. Book value per share is total shareholder equity divided by shares outstanding. A ratio above one means the market values the company at more than its balance-sheet net worth, usually reflecting expected future growth or intangible value the accounts do not capture.
Source:Equity valuation ratios
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Worked example
How to use this calculator
- 1
Enter your values
Enter market price per share and book value per share.
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Adjust the options
Fine-tune any options to match your situation.
- 3
Read your result
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Frequently asked questions
What is the price-to-book ratio?
The price-to-book ratio compares a company's market price per share to its book value per share, where book value is net assets on the balance sheet divided by shares outstanding. It shows how much investors are willing to pay for each dollar of the company's accounting net worth. A ratio of two means the market values the firm at twice its recorded book value.
What is a good P/B ratio?
Traditionally, value investors regard a P/B below one, or below three as a looser guide, as potentially attractive, but the right level depends on the industry and the company's return on equity. Highly profitable firms justifiably trade at high P/B, while a low ratio can signal either a bargain or a business in decline. Always interpret P/B alongside profitability and growth.
Why do some stocks trade below book value?
A P/B below one means the market values the company at less than its stated net assets. This can happen when investors expect losses that will erode book value, when assets on the balance sheet are overstated relative to what they could actually fetch, or during broad market pessimism. Sometimes it genuinely marks an undervalued stock, and sometimes it correctly anticipates trouble ahead.
For which companies is P/B most useful?
Price-to-book works best for asset-intensive businesses such as banks, insurance companies, real estate firms, and manufacturers, where the balance sheet captures most of the company's real value. It is far less useful for technology, software, and service firms, whose worth lies in brands, intellectual property, and human capital that standard accounting largely leaves off the books, making book value a poor guide.
How does P/B differ from the P/E ratio?
The price-to-book ratio compares price to net assets, while the price-to-earnings ratio compares price to annual profit. P/B reflects what you pay for the company's balance-sheet value, and P/E reflects what you pay for its earning power. Value investors often use them together, since a low P/B combined with a reasonable P/E can point to a genuinely cheap, profitable stock.