Ten Stock Analysis Ratios Used By The Pros: Price-to-Book

Third Key Ratio :


This ratio focuses on what would be retained if the business was sold off immediately. It takes the total assets and subtracts the total liabilities to produce the ‘book’ value – the amount that would be left if everything was liquidated. Note that intangible assets (brands, patents) are ignored in the book value as they are difficult to value and sell. A lower Price-to-Book will be attractive as an investor will not be paying too much for the potential leftovers of a company in the case of bankruptcy.


Market Capitalization

Book Value

Price-to-Book= Market Capitalisation/Book Value

Book Value = Total Assets – Intangible Assets – Total Liabilities

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