Price-to-Book (P/B) Ratio
Share price divided by book value per share.
What is Price-to-Book (P/B) Ratio?
How much the market pays for each dollar of accounting net worth. Low P/B is a classic value-investing screen. Most meaningful for asset-heavy businesses like banks and insurers; least meaningful where value is intangible.
Price-to-Book (P/B) Ratio: a worked example
A $30 stock with $20 book value per share trades at 1.5x book.
More terms in Economics & Financial Reporting
Business Cycle
The recurring pattern of expansion, peak, contraction, and trough.
Leading, Coincident & Lagging Indicators
Data series that move before, with, or after the business cycle.
Deflation vs. Disinflation
Falling prices versus a slowing rate of price increases.
Currency Valuation & Exchange Rates
What one currency buys of another, and who wins when it moves.
Sovereign Debt
Bonds issued by a national government.
Trade Deficit
A country imports more goods and services than it exports.
Income Statement
Revenue, expenses, and profit over a period of time.
Balance Sheet
Assets, liabilities, and equity at a single point in time.