Price to book (P/B)

Also called: price to book, p/b, book value

Compares the share price with the accounting value of what shareholders own (assets minus debts), per share.

Formula

P/B = Market cap ÷ Shareholders' equity (or Share price ÷ Book value per share)

Worked example

1. Market cap = $40.0bn
2. Shareholders' equity = $8.0bn
3. P/B = $40.0bn ÷ $8.0bn

Result: 5.0×

How to read it

Below 1× means the market values the company at less than its book value. Asset-light businesses such as software often trade far above book because their value is in brands and code that accounts don't capture.

Worked example uses made-up figures for 'Example plc'

See it with real numbers: Any company page → (free account)