What is the Price-to-Book ratio?
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The Price-to-Book ratio is calculated as Stock Price divided by (Total Assets minus Intangible Assets minus Liabilities) per share. It helps determine whether a stock is trading at a reasonable price relative to its book value. For meaningful analysis, always compare a company's P/B against peers in the same industry, since a very low ratio can sometimes indicate underlying business problems rather than a bargain.
Think about a stock's price versus its net asset value per share. Compare it to industry peers — a very low number can signal trouble, not a bargain.