Price / Book Value (market method)
Price / Book Value (share method)
Definition – What is Price/Book Value?
Price/Book Value is the ratio of the price of a stock to the book value of the company.
Formula – How to calculate Price/Book Value
Price/Book Value (Market Method) = Market Cap / Book Value
Price/Book Value (Share Method) = Share Price / Book Value per Share
Market Method – A company has a market cap of $50,000 and book value of $5,000.
Price / Book Value (Market Method) = $50,000 / $5,000 = 10.00
Share Method – A company has a share price of $35 and a book value per share of $17.92.
Price / Book Value (Share Method) = $35 / $17.92 = 1.95
Sources and more resources
- Wikipedia – P/B Ratio – Wikipedia’s entry on the Price/Book Ratio. Includes details on values and limitations of the metric.
- Motley Fool – How to use the Price / Book Ratio – An overview of what the P/B ratio is used for.
- The Balance – Understanding the Price/Book Ratio – An explanation of Price to Book ratios.
- FinanceForulas.net – Price to Book Value – The formula for Price to Book Value.
- Investopedia – Price to Book Ratio – A breakdown of price to book ratio.