P/B Ratio (Price-to-Book) — Mutual Fund Term Explained

Market price divided by book value per share. Below 1.0 means the stock trades cheaper than its asset value.

Price-to-Book ratio compares a company's market value to its book value (net assets on the balance sheet). A P/B below 1.0 means the market values the company less than its assets.

Formula

P/B = Market Price per Share ÷ Book Value per Share

Related terms

• P/E Ratio (Price-to-Earnings) — How much investors pay for each rupee of company earnings. High P/E = expensive valuation; low P/E = potential value.

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