Price to Book Ratio
Formula: Price to Book Ratio = Market Price Per Share / Book Value Per Share
The Price to Book (P/B) Ratio is a valuation metric used to compare a company's current market price to its book value. The book value is the net asset value of a company calculated as total assets minus intangible assets (patents, goodwill) and liabilities. The P/B ratio is used by value investors to identify potential investments at a reasonable price. It's especially useful in the banking, real estate, and insurance sectors where valuing companies based on their assets is more relevant.