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What is the Price to Book Ratio (P/B Ratio)?

The price to book ratio compares a company’s current stock market price to its book value (which is generally speaking a company’s net assets).

To calculate, an analyst need only divide a company’s latest market price by it book value, which is calculated by taking ‘Total Assets minus Intangible Assets and Liabilities.’ The P/B ratio gives some idea of what premium an investor is paying if the company went bankrupt immediately.

Keywords: stock market, corporate finance, P/B ratio, ratios, intangible assets,