Price to Book Ratio Calculator for Stock Valuation
Compare a market share price with book value per share.
Enter market price per share, book value per share, and shares outstanding, then select Calculate.
About the Price to Book Ratio Calculator
The price-to-book ratio compares what the market pays for a share with the accounting book value of that share. Book value per share is shareholders’ equity divided by shares outstanding, usually from the latest balance sheet. A P/B of 2 means the market capitalization is twice reported equity. Value investors often screen for low P/B in asset-heavy industries, while growth companies with little tangible equity can trade at high multiples without that implying a data error. Formula: P/B = market price per share ÷ book value per share; market capitalization = price × shares; shareholders’ equity = book value per share × shares. The three results are internally consistent: P/B also equals market capitalization divided by equity. All inputs must be positive, so negative book value—possible when accumulated losses exceed capital—is not handled. Use the same share count for price and book value; mixing basic shares with a fully diluted book value will distort the ratio. Book value is an accounting residual, not a liquidation quote. Intangible assets, off-balance-sheet leases, mark-to-market gaps, and write-downs all move equity without an immediate market-price change. Banks and insurers are often compared on P/B because equity is central to their regulation, whereas software firms are usually better compared on earnings or sales. A P/B below 1 can mean the market doubts asset quality, not that shares are automatically cheap. Use the price to book ratio calculator to compare a stock with sector peers, to translate a target P/B into an implied capitalization, or to check that a reported multiple matches price and book on the same date. The output is a screening aid in US dollars, not a buy or sell recommendation. Confirm whether book value is tangible book, IFRS or GAAP, and whether shares are diluted before you rely on a small difference versus a peer.
Price-to-book examples
Share-price and book-value pairs that match the calculator.
| Inputs | Output | Note |
|---|---|---|
| Price $20; book $10; 1,000 shares | P/B 2; market cap $20,000.00; equity $10,000.00 | The market pays twice reported book value. |
| Price $15; book $5; 2,000 shares | P/B 3; market cap $30,000.00; equity $10,000.00 | A higher multiple on the same $10,000 of equity. |
| Price $8; book $16; 5,000 shares | P/B 0.5; market cap $40,000.00; equity $80,000.00 | The shares trade at a discount to book value. |
How to calculate price-to-book ratio
- Enter the current market price per share.
- Enter book value per share and the matching shares-outstanding figure.
- Select Calculate to review P/B, market capitalization, and implied equity.
- Compare the multiple with peers that use the same book-value definition.
Price-to-book ratio FAQ
What does a P/B below 1 mean?
The market capitalization is less than reported shareholders’ equity. That can reflect discounted assets, expected losses, or a genuine bargain; the ratio alone does not say which.
Should I use tangible book value?
Use tangible book if that is how your peer set is quoted. This calculator takes whatever per-share book figure you enter and does not subtract intangibles for you.
Which share count should I use?
Use the same count that produced book value per share, typically diluted shares if the source is diluted. Mixing counts breaks the identity between P/B and cap divided by equity.
Why can’t I enter a negative book value?
The calculator requires positive inputs so P/B stays a conventional multiple. Negative equity needs a separate analysis rather than a signed P/B screen.
Is this investment advice?
No. P/B is a valuation screen. Combine it with asset quality, returns on equity, and professional advice before making a decision.