Price-To-Book Ratio

Price-To-Book Ratio - P/B Ratio
A ratio used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value (book value is simply total assets minus intangible assets and liabilities).
A lower P/B ratio could mean that the stock is undervalued. However, it could also mean that something is fundamentally wrong with the company. As with most ratios, be aware this varies a fair amount by industry. This ratio also gives some idea of whether you're paying too much for what would be left if the company went bankrupt immediately. Also known as the "price/equity ratio".
Value By The Book - The P/B ratio can be an easy way to determine a company's value, but it isn't magic! Ratio Analysis Tutorial - If you don't know how to evaluate a company's present performance and its possible future performance, you need to learn how to analyze ratios.