Price-to-Book Ratio Calculator
Find out how a stock's market price compares to its accounting book value. Enter the share price, total assets, total liabilities, and shares outstanding to calculate the P/B ratio and see whether the stock trades at a premium or discount to book value.
The price-to-book ratio (P/B) compares a company's market valuation to its book value -- essentially what shareholders would receive if the company liquidated all assets and paid off all debts. A P/B of 1.0 means the market values the company at exactly its net asset value. Below 1.0 suggests the stock may be undervalued (or the company has problems). Above 1.0 means investors are paying a premium for future growth or intangible assets.
For example, a company with $10 million in assets, $6 million in liabilities, and 200,000 shares outstanding has a book value per share of $20. If the stock trades at $45, the P/B ratio is 2.25, meaning investors pay $2.25 for every $1 of book value.
When P/B Is Most Useful
P/B works best for asset-heavy industries like banking, insurance, real estate, and manufacturing. Banks are often valued primarily on P/B because their assets (loans) and liabilities (deposits) are already marked close to market value. A bank trading below 1.0 P/B often signals distress.
P/B is less useful for tech and service companies where the real value comes from intellectual property, brand, and talent -- none of which appear on the balance sheet. A software company might trade at 15x book value because its code, customer relationships, and recurring revenue are worth far more than its physical assets.