Calculate the price-to-book ratio from market price and book value per share to assess whether a stock trades above or below its equity value.
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Result
Price-to-book ratio — the market values the company at 1.5 times its book equity per share.
How to read this result
A P/B of 1.5× is moderate — typical of established companies with tangible asset bases.
Equity Valuation
The price-to-book ratio (P/B) compares a company's market price per share to its book value per share, showing how much investors pay for each unit of net asset value.
P/B tells investors whether the market values a company above or below the accounting value of its equity. A P/B below 1.0 means the stock trades below book value — potentially a bargain, or a sign the market expects asset write-downs.
The ratio is most useful for asset-heavy industries (banking, insurance, real estate) where book value closely approximates economic value. For asset-light companies (tech, services), P/B is less meaningful because intangible assets dominate.
Divide market price by book value per share. This price-to-book ratio formula explanation shows how the entered values flow into the main result and the supporting figures the calculator returns.
P/B = Market Price Per Share / Book Value Per Share
Book value per share = (Total Assets − Total Liabilities) / Shares Outstanding.
A stock trades at 45 with book value of 30 per share. P/B = 45 / 30 = 1.5×. This worked example shows how the same steps apply to a realistic scenario so users can sense-check their own inputs against a concrete benchmark.
Book value is based on historical cost and may not reflect current market values. Intangible assets and goodwill distort book value. Not comparable across industries. The extra explanation keeps the page useful for searchers who need to understand not just the number, but also the assumption set behind it.
Frequently asked questions
Below 1.0 may suggest undervaluation. Banks typically trade at 0.8–1.5×. Tech companies often trade at 5–20× because their value is in intangibles. Compare within the same sector.
If book value is negative (liabilities exceed assets), P/B is not meaningful. This calculator requires positive book value.
Use P/B for financial institutions and asset-heavy companies. Use P/E for earnings-driven businesses. Use both together for a fuller picture.
The market may expect future losses, asset write-downs, or poor management. It can also reflect cyclical lows or market pessimism that may reverse.
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