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Price-to-Book Ratio Calculator

Compare a stock's price to its book value.

How it is calculated

The ratio is P/B = share price / book value per share. Both are amounts in the same currency per share. Book value per share is what you get from the balance sheet: common equity (assets minus liabilities, minus any preferred equity) divided by shares outstanding; analysts who also remove intangible assets get tangible book value, a stricter figure. The tool does not compute it for you, so you enter the figure. The result is shown with two decimals. Book value must be above zero, so a company with negative equity returns no result. A P/B below 1 means the market price is under the accounting value of net assets.

Worked example

A share trades at 45 and the book value per share is 30. P/B = 45 / 30 = 1.50. The market is paying 1.50 for every 1.00 of net assets on the books. A price of 24 against the same book value would give 24 / 30 = 0.80.

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Common mistakes

  • Using total company equity instead of equity per share. Divide by the number of shares first.
  • Using stale book value. It changes with every quarterly report, while price changes daily.
  • Comparing P/B across very different industries. Asset-heavy firms such as banks and asset-light software firms are not comparable.
  • Treating a low P/B as automatically cheap. It may reflect assets that are worth less than their recorded value.

Sources

About this calculator

This calculator finds the price-to-book (P/B) ratio: P/B = Share Price / Book Value per Share, where book value per share is common shareholders' equity (total equity minus any preferred equity) divided by shares outstanding. Subtracting intangible assets as well gives tangible book value per share, a stricter variant. A P/B under 1 can suggest a stock is trading below the accounting value of its net assets.

Value investors, equity analysts, and finance students use P/B alongside metrics like P/E to screen for undervalued stocks, and it's especially relevant for asset-heavy businesses such as banks and industrials, where book value closely tracks tangible worth.

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Comments (1)

  • Editorial team

    P/B tends to be most informative for banks, insurers and other balance-sheet-heavy firms, where book value is close to what the business is built on. For asset-light companies much of the value is not on the balance sheet, so a high P/B says little by itself. Buybacks can also shrink book value per share and inflate the ratio. Which kind of company are you looking at, and do you use tangible book value?

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