Price to Book (P/B) Ratio Calculator
Calculate the price-to-book ratio from share price and book value per share, derived from shareholder equity and shares outstanding.
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Result
P/B Ratio
5.63
Book Value Per Share
$8.00
How to Use the Price to Book (P/B) Ratio Calculator
Enter the current share price, then choose how to supply book value per share. In the default mode, enter total shareholder equity and shares outstanding and the calculator derives book value per share for you. Or switch to direct entry if you already know the book value per share figure (for example from a stock screener) and want to enter it straight in.
P/B Ratio = Share Price / Book Value Per Share
Example
A company has $80,000,000 in total shareholder equity and 10,000,000 shares outstanding, giving a book value per share of $8. If the stock trades at $45 per share, the P/B ratio is 45 / 8 = 5.625, meaning the market values the company at over 5.6 times its book value.
Common Use Cases
- Screening for potentially undervalued stocks trading close to or below book value.
- Comparing valuation across companies in asset-heavy industries like banking or real estate.
- Checking how a stock's valuation has changed relative to its underlying net asset value over time.
FAQs
- What does a P/B ratio below 1 mean? It suggests the stock trades for less than the accounting value of its net assets, which some value investors see as a potential bargain — though it can also signal the market expects continued losses or asset write-downs.
- Is a high P/B ratio always bad? Not necessarily. Companies with strong intangible assets, brand value, or high-growth prospects — like many technology or software companies — often trade at a high P/B ratio because book value doesn't capture their true earning power.
- Which industries is P/B most useful for? It's most meaningful for asset-heavy, capital-intensive businesses such as banks, insurers, and real estate companies, where book value closely tracks tangible net worth. It's less useful for service or tech companies with few physical assets.