Price to book ratio is a ratio for comparison of company’s worth as per its books of accounts and a company’s worth as judged by the stock market. The price to book ratio is calculated as ratio of market price per share to the book value per share. Alternatively price to book ratio can be calculated by dividing market capitalization by total shareholder funds (equity capital and reserves and surplus).
Generally speaking, the higher the price to book ratio higher is the higher the premium is that investors are willing to pay for the stock. Lower price to book ratios tend to indicate that a stock is undervalued or there are some inherent problems with the company.
Homepages -
Dogs of the Dow Glossary -
Dogs of the Dow -
Investor Glossary # A B C D E F G H I J K L M N O P Q R S T U V W X Y ZRelated Terms -
Stock Market Indicators -
Dividend Yield -
Earnings Yield
