Price-to-Book (P/B) Ratio Calculator
Calculate a company's Price-to-Book ratio using its share price, assets, and liabilities.
Understanding the Price-to-Book Ratio
The Price-to-Book (P/B) ratio compares a company's market capitalization to it's book value. Book value is theoretically what would be left if the company liquidated all of it's assets and paid off all it's debts.
Why Value Investors Use P/B
Value investors use the P/B ratio to find undervalued companies. A P/B ratio under 1.0 means the stock is trading for less than the value of it's assets, which could indicate a bargain (or a company in serious trouble).
Worked Example
- Total Assets: $1,000,000
- Total Liabilities: $400,000
- Book Value: $600,000
- Shares Outstanding: 20,000
- Book Value Per Share: $30.00
- Share Price: $50.00
- P/B Ratio = 50 / 30 = 1.67.
Frequently Asked Questions
Is the P/B ratio useful for tech companies?
No, the P/B ratio is mostly useless for software and tech companies because their most valuable assets (intellectual property, code, brand value) are intangible and don't show up on the balance sheet. P/B is best used for banks and manufacturing firms.
Disclaimer: This calculator is for educational and informational purposes only. It is not a substitute for professional financial advice. Results are estimates based on the information provided and may not reflect actual outcomes. Please consult with a qualified financial advisor, accountant, or tax professional before making any financial decisions. Past performance does not guarantee future results.