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Price To Book Ratio Calculator

Calculate the price-to-book ratio of a company to evaluate its market value against book value.

Valuation inputs

$
$

Price-to-Book (P/B) ratio

2.00x

Market price relative to book value per share or common equity.

Valuation assessment

Moderate Valuation

Typical range for stable, profitable companies

Ratio summary

Price-to-Book (P/B)2.00x

How the P/B ratio is calculated

Step-by-step breakdown from your inputs to the price-to-book multiple.

  1. Calculate Price-to-Book (P/B) ratio

    P/B=Share PriceBVPS=50.0025.00=2.00\text{P/B} = \frac{\text{Share Price}}{\text{BVPS}} = \frac{50.00}{25.00} = 2.00

    Divide the share price by book value per share (BVPS). With a price of $50.00 and BVPS of $25.00, the P/B ratio is 2.00x.

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What is the price-to-book (P/B) ratio?

The price-to-book ratio compares a company's market capitalization or share price to its book value, the accounting value of shareholders equity on the balance sheet. Value investors use P/B to find stocks trading below the net asset value implied by financial statements.

P/B is most informative for asset-heavy businesses such as banks, insurers, and industrial firms where book value tracks economic reality. Pair it with the price-to-earnings calculator for earnings-based context, and use the PEG ratio calculator when you also want to adjust valuation for expected growth.

P/B ratio formulas

On a per-share basis, divide the current stock price by book value per share (BVPS). At the company level, divide market capitalization by common shareholders equity (total equity minus preferred equity):

P/B=Share PriceBook Value Per Share (BVPS)\text{P/B} = \frac{\text{Share Price}}{\text{Book Value Per Share (BVPS)}}
P/B=Market CapitalizationCommon Shareholders’ Equity\text{P/B} = \frac{\text{Market Capitalization}}{\text{Common Shareholders' Equity}}

When you only have balance sheet line items, compute common equity first, then BVPS:

BVPS=Total Assets−Total Liabilities−Preferred EquityShares Outstanding\text{BVPS} = \frac{\text{Total Assets} - \text{Total Liabilities} - \text{Preferred Equity}}{\text{Shares Outstanding}}

Worked example: $50 share price and $25 BVPS

A stock trading at $50 with book value per share of $25 has a P/B of 2.00, meaning investors pay twice the accounting net asset value per share:

P/B=5025=2.00\text{P/B} = \frac{50}{25} = 2.00

Company-level calculation

If market cap is $1,000,000,000 and common equity is $500,000,000, the P/B is also 2.00. Both methods should agree when share count and per-share figures are consistent.

How to interpret P/B in practice

  • P/B below 1.00: The stock may trade below book value, which can signal distress, cyclical trough earnings, or a genuine bargain.
  • P/B between 1.00 and 3.00: Common for stable, profitable companies with moderate intangible assets.
  • P/B above 3.00: Often reflects strong brands, high return on equity, or markets pricing in future growth not yet on the balance sheet.
  • Compare within the industry: Software and services firms often carry high P/B because most value sits off the balance sheet.

Frequently asked questions

What is a good P/B ratio?
There is no universal threshold. Banks and insurers often trade near 1.00x book, while asset-light tech firms can trade at 5x or higher. Compare a company to its sector peers and to its own historical range rather than a single magic number.
Why subtract preferred equity?
Preferred stock sits ahead of common shareholders in the capital structure. Common equity, the residual claim after liabilities and preferred stock, is the correct denominator when valuing ordinary shares with P/B.
When is P/B less useful?
P/B breaks down for companies whose value is mostly intangible (software, biotech, advertising) because accounting book value understates economic assets. In those cases, use P/E, P/S, or discounted cash flow instead.
What is the difference between P/B and P/E?
P/B compares price to balance sheet equity per share. P/E compares price to earnings per share from the income statement. A profitable company can have low P/B and high P/E if assets are written down but earnings recover.
Should I use trailing or forward book value?
Most screeners use the most recent reported book value (trailing). Forward book value requires your own forecast of retained earnings and asset write-ups, which is less common for quick ratio analysis.
Are my inputs saved on your servers?
No. All calculations run locally in your browser. Changing inputs updates the page URL so you can bookmark or share a specific scenario.

Resources and references

The formulas and methods in this calculator were checked against these independent sources.