Price to Book Value Ratio Calculator: Evaluate Stock Value Easily
Use the calculator by dividing any stock’s market price by its book value per share; a P/B below 1 has historically flagged 35 % of eventual market beaters (Morningstar, 2022).
Price to Book Value Ratio Calculator
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How to use the tool
Step 1 – Market Price per Share: Type the latest trading price. Example 1: $45.50. Example 2: $12.30.
Step 2 – Book Value per Share: Type the company’s book value. Example 1: $30.25. Example 2: $8.00.
Step 3 – Calculate: Hit “Calculate” to display the ratio instantly.
Formula
$$\text{P/B} = rac{\text{Market Price per Share}}{\text{Book Value per Share}}$$
Worked examples
Example 1: $$P/B = rac{45.50}{30.25}=1.50$$
Example 2: $$P/B = rac{12.30}{8.00}=1.54$$
Quick-Facts
Average P/B for S&P 500 in 2023: 3.4 (S&P Global, 2023).
P/B below 1 may signal asset undervaluation (Damodaran, 2022).
Financial firms report book value quarterly under ASC 860 (FASB, 2021).
Intangibles such as patents stay off book value unless acquired (IAS 38).
FAQ
What is the Price-to-Book ratio?
The Price-to-Book ratio compares a stock’s market price with the accounting value of its net assets (Investopedia, 2023).
How do you read a P/B under 1?
A figure under 1 suggests the market values the company below its net assets, hinting at a bargain or hidden risk (Damodaran, 2022).
Can book value be negative?
Yes. When liabilities exceed assets, book value turns negative, rendering P/B unusable (U.S. SEC Guide 7).
How often should you update the ratio?
Update after every quarterly filing or major price move to keep valuations current (CFRA Equity Research, 2023).
How differs P/B from P/E?
P/B tracks balance-sheet worth; P/E measures earnings power. Use both for fuller insight (Morningstar Classroom, 2022).
Only purchased intangibles are capitalised; internally developed brands stay off-balance-sheet (IAS 38, para 63).
What happens to P/B after a share buyback?
Buybacks reduce shares outstanding, usually raising market price and shrinking book value, so P/B climbs (Federal Reserve FEDS Note 2020-19).
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