Glossary · from the DESK dictionary
Price-to-Book Ratio (P/B)
The share price divided by book value per share.
In plain words
Shows how much the market is willing to pay relative to a stock's accounting book value.
In more detail
The price-to-book ratio relates market value to accounting equity. It is informative for banks and insurers, because their assets consist largely of valued financial positions. For service and technology companies it is largely useless: their essential assets are not on the balance sheet, so the ratio systematically appears high.
Formula
P/B = Share price / Book value per share
Divides the current share price by accounting equity per share.
Example
A bank trades at 0.6 times book and a software vendor at 14 times. The comparison is meaningless — the second never capitalised its most important assets.
What it means for traders
A classic value-investing metric, especially relevant for capital-intensive industries like banking.
Common pitfalls
Not very meaningful for companies with mostly intangible rather than physical assets.
Related terms
Book-to-Market Ratio · Book Value · Book Value Per Share (BVPS) · Price-to-Tangible-Book-Value · Q Ratio (Tobin's Q)
From the DESK dictionary. For information only, not investment advice.
This is one page of many.
- The DESK dictionary explains more than 9,400 market terms like this one, in English and German – searchable, sorted by topic and difficulty, with favourites.
- Plus the Macro Terminal with more than 900 indicators per country, company pages and a weekly report.
Also open to read: Glossary A–Z · Free calculators · Weekly report archive
DESK is a research tool and not investment advice. Page generated: 2026-10-12.