# Price-to-Book Ratio Calculator Calculate the price-to-book ratio (P/B) for any stock. Compare market price to book value per share and see if a stock trades at a premium or discount. ## What this calculates 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. ## Inputs - **Market Price Per Share** ($) — min 0.01 — Current market price of one share. - **Total Assets** ($) — min 0 — Total assets from the balance sheet. - **Total Liabilities** ($) — min 0 — Total liabilities from the balance sheet. - **Shares Outstanding** — min 1 — Total number of shares outstanding. ## Outputs - **Total Book Value** — formatted as currency — Total assets minus total liabilities. - **Book Value Per Share** — formatted as currency — Book value divided by shares outstanding. - **Price-to-Book Ratio** — Market price per share divided by book value per share. - **Market Capitalization** — formatted as currency — Market price times shares outstanding. - **Premium / Discount to Book** — formatted as percentage — How much the stock trades above or below book value. ## Details 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. ## Frequently Asked Questions **Q: What is a good price-to-book ratio?** A: It varies by industry. For banks, 1.0-1.5 is typical and above 2.0 is considered expensive. For the S&P 500 overall, the average P/B is around 4.0. Technology companies often trade at 10x or higher because their value comes from intangible assets. Always compare P/B to industry peers rather than using a universal benchmark. **Q: Can a stock have a negative book value?** A: Yes. If total liabilities exceed total assets, book value is negative. This happens when a company has accumulated large losses or taken on significant debt. Companies like McDonald's and Starbucks have had negative book equity due to aggressive share buybacks and debt. A negative book value makes P/B meaningless, so analysts use other metrics. **Q: What is the difference between P/B and P/E ratios?** A: P/B compares stock price to book value (net assets on the balance sheet), while P/E compares stock price to earnings per share. P/B measures asset-based value, P/E measures earnings-based value. Use P/B for asset-heavy companies and P/E for profitable companies. Many analysts use both together for a more complete picture. **Q: Why do some stocks trade below book value?** A: A P/B below 1.0 can mean the market believes the company's assets are overvalued on the books, that future earnings will be poor, or that the company may need to write down assets. It can also signal a genuine bargain if the market is being overly pessimistic. Value investors specifically look for stocks trading below book value, but it requires careful analysis of why the discount exists. --- Source: https://vastcalc.com/calculators/finance/price-to-book Category: Finance Last updated: 2026-04-08