Price-To-Book Ratio (P/B Ratio)

A ratio used to compare a stock's market value to its value as on books. It is calculated by dividing the closing price of the stock by the latest quarter's book value per share.Also known as the "price-equity ratio".

It is Calculated as

P/B ratio=stock price/book value

A lower P/B ratio means that the stock is undervalued it has potentail to raise. The value would be lower if something fundamentally wrong with the company.

This ratio also gives some idea of what would be left if the company is closed today.