Investing term
What is P/B ratio (price-to-book)?
Market cap ÷ book value of equity. What you're paying for a dollar of accounting net worth.
The price-to-book ratio (P/B) compares a company's market value to its accounting net worth (book value). A low P/B can flag a bargain — or a troubled business the market has written off. It's most meaningful for asset-heavy companies like banks and insurers, and least useful for asset-light firms whose real value lies in brands or software the balance sheet barely captures.
For example
A bank trading at a P/B of 0.8 is priced below its accounting net worth — possibly cheap, possibly a sign the market expects loan losses.
P/B ratio (price-to-book) is taught hands-on in Stage 15 — Valuation for Investors.
See the lesson →