Price To Book Value or Market to Book Ratio, usually the abbreviations P/B or M/B are used. It is a term that measures the share’s market price and its book price.
If the value is greater than 1, the market value of the company is greater that the valuation of equity in the financial statement in the balance sheet. Conversely, if the value is significantly lower than 1, the potential reproductive capacity of assets is assessed by investors as insufficient due to the amount of risk associated with the type of activity and due the volume of the share capital.
Calculation:
P/B = Share Price / Share Book Value (Total Assets - Intangible Assets and Liabilities)
What is Price to book value ration for?
The ratio reflects the perception of the company by investors.
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