Plain-English definitions, reviewed by an independent investor
P/B Ratio (Price-to-Book)
P/B compares a stock’s price with the accounting value of its net assets per share.
P/B compares a stock’s price with the accounting value of its net assets per share.
P/B = Share Price ÷ Book Value per Share
Why it matters
It helps spot stocks trading below the value of their tangible assets.
Common confusion
Book value understates intangibles like brands and software, so P/B fits asset-heavy firms best.
Frequently Asked Questions
What is a low P/B?
Below 1 can mean the market prices the company under its book assets, though reasons vary.
When is P/B useless?
For service or tech firms with few tangible assets, book value says little.