Valuation Terms
Price to Book Ratio
A ratio comparing market value to accounting book value.
Also called: P/B ratio, price to book
What it means
The price-to-book ratio compares a company’s market price to its book value, often on a per-share basis. It is more commonly used in asset-heavy industries such as banking, insurance, or industrial businesses than in some software or service businesses.
Why it matters
It helps users compare market value to recorded net assets, though book value may not capture real economic value equally well across industries.