The price to book ratio (P/B) is the ratio of the company’s price over the total of the company. The P/B is calculated by dividing the stock’s current closing priceWhat are value stocks? A value company is a company that app... More by the most recent quarter’s book valueWhat does book value mean? In financial accounting, book va... More per share. The formula used is:
Similar to the and , a lower P/B indicates the company stock could be undervalued. It may also be a warning sign of fundamental problems within the company, for example, it may indicate you are paying too much for what would be left should the company go bankrupt overnight.
Like most other ratios used in trading, the typical P/B can vary among different industries.
P/B is also sometimes called the priceWhat is price? The price is the measure of the value of good... More/equity ratio.
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