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Price to Book (P/B) Ratio Calculator

Written by:
PK

On this page is a price to book ratio calculator. Enter the current price per share of a company plus its book value (optionally removing intangible assets and goodwill) to compute the price to book ratio.

Price to Book Ratio Calculator

What is the Price to Book ratio?

A company's price to book ratio compares a company's book value – the company's assets minus all of its debts and liabilities – to the price you pay to purchase the company (or a share of the company) in the market. 

Price to Book Ratio Formula

The price to book value formula is

Where:

  • Price - the current trading price of a share of a company, or alternatively, the total market cap.
  • Book Value - the net value on the balance sheet of assets minus debts and liabilities. Optionally, remove intangible assets and goodwill.

Limitations on Price to Book Value

With the rise of asset-light companies, there are many industries where book value doesn't accurately reflect the value of a company's assets. Companies possess many intangibles and tangibles that aren't booked as assets – intellectual property, copyrights, legal precedence, relationships, market share, reputation, talent, etc. As a result, book value doesn't generally drive business valuation except for asset-heavy industries and companies. In many cases, financial company book value is relatively accurate.

Book value marks don't always accurately represent actual value. Assets are generally marked at their purchase prices, and some assets are adjusted for depreciation, depletion, or amortization.

      

PK

PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK is in his mid-30s and works and lives in the Bay Area with his wife, two kids, and dog.

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