P/E compares price against earnings; P/B compares price against book value from the balance sheet instead — often used for asset-heavy businesses.
How it works
Share price divided by book value per share gives the P/B ratio.
What this does not include
Book value can understate or overstate true economic value depending on how assets are carried on the balance sheet (historical cost vs. fair value) — P/B is most meaningful for businesses where book value closely tracks real asset worth.
How to use this calculator
- Enter the share price and book value per share.
A worked example
A $50 share price against a $20 book value per share: P/B ratio = 50 ÷ 20 = 2.5.
What the variables mean
| Variable | Meaning |
|---|---|
| Share price | Current market price per share |
| Book value per share | Net asset value per share, from the balance sheet |
Edge cases worth knowing
A P/B ratio below 1 can suggest the market values the company below its accounting net worth — sometimes a sign of undervaluation, sometimes a sign the market expects continued losses.
Zero book value per share makes the ratio undefined — there’s no asset base to compare the share price against, so the calculator declines to show a result.
Frequently asked questions
What does a P/B ratio below 1.0 mean?
The stock trades below its reported book value — sometimes a sign of undervaluation, sometimes a sign the market doubts the reported book value will hold up (e.g., impaired assets).
Which industries rely most on P/B?
Banks, insurers, and other asset-heavy or financial businesses, where book value closely reflects tangible net worth, more so than asset-light service or technology businesses.
How do I find book value per share?
This site’s separate book value per share calculator computes it directly from total stockholders’ equity, preferred equity, and shares outstanding.
