Valuation Metrics
P/B Ratio
Price to Book Ratio
Definition
Stock Price ÷ Book Value Per Share = How many times book value
Explanation
The P/B ratio compares stock price to the company's net asset value (assets minus liabilities). A P/B below 1 means the stock trades below its book value—theoretically, you could liquidate the company and get more than you paid. Popular for valuing banks and asset-heavy industries.
Example
P/B 0.8 = Stock trades at 20% discount to book value