Price to Book (P/B) Calculator

P/B compares market price to accounting book value.

How the Math Works

The Price to Book (P/B) ratio is calculated by dividing a company's market price per share by its book value per share. The book value per share is derived from (total assets - total liabilities) divided by the number of outstanding shares. This formula measures how much investors are paying for each dollar of a company's net assets, providing a quick snapshot of valuation relative to book value.

Practical Applications

To use this calculator, input the current stock price and the company's book value per share. First, determine the book value by subtracting total liabilities from total assets on the balance sheet, then divide by shares outstanding. Compare your result to industry peers - a P/B below 1 may indicate undervaluation, while above 1 suggests the market expects growth beyond book value.

Day-to-Day Use

This ratio helps you quickly assess whether a stock might be cheap or expensive relative to its balance sheet strength. When researching potential investments, a low P/B could signal a bargain opportunity, especially in asset-heavy industries like banking or real estate. It's particularly useful for value investors seeking companies trading below their net asset value, providing a simple benchmark for daily investment decision-making.

Worked example

$30 ÷ $20 → 1.5.

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