What is price-to-book ratio?

Introduction to price-to-book ratio (P/B)

The price-to-book ratio (P/B ratio) is a financial ratio that is used to compare a book value of the company to its current market price.

In other words, the P/B ratio is a measure of the share price relative to the value of the company's total assets minus total liabilities (per share). To be conservative, analysts sometimes remove intangible assets and goodwill from the equation as their value is significantly more subjective and often has no resale value. In fact, the P/B ratio is a "Price to Tangible Book Value."

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