Price to Book Value Ratio
Price to Book Value = Current Market Price / Total Assets Intangible Assets
The value of assets is taken from the most recently published balance sheet.
The price to book value ratio looks at an immediate liquidation scenario. Investors therefore compare the price that they are paying for the company against what they would receive if the business shut operations right away.
The price to book value ratio can be used to make some serious interpretations about the business of the company and how the market is reacting to it. Here are some of the common interpretations made on the basis of price to book value ratio:
- Market Related Ratios
- Price to Earnings (PE) Ratio
- Price Earnings Growth (PEG) Ratio
- Price to Cash Flow Ratio
- Price to Sales Ratio
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