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AppleNVIDIABerkshireMetrics guide
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Metrics guide›Size and valuation

Price/Book (P/B)

Market cap divided by shareholders' equity: what investors pay for each dollar the balance sheet says the owners have.

Worked example · a round-number company

Market cap$10.0B÷Equity (book value)$4.0B=P/B2.5x

How to read it

↓Lower is better. Banks and insurers are often valued on it; software and brands sit far above it because their value isn't on the balance sheet.

Example Co. 2.5x
Under 1x1x to 3xOver 3x

Under 1x is below the stated book value; most companies trade well above it.

Keep in mind

  • Buybacks and write-downs shrink equity and push it up.
  • Blank when equity is zero or negative.

Related

Return on equity (ROE)P/E ratio