About the Price to Book Ratio Calculator
This price to book ratio calculator compares a company’s share price with its book value — the shareholders’ equity on its balance sheet — on a per-share basis. Enter the share price, total shareholders’ equity, any preferred equity and intangible assets, and the number of common shares outstanding, and it returns book value per share (BVPS), the P/B ratio, tangible book value per share, price-to-tangible-book and how far the price sits above or below book. If you already know book value per share, switch to the quick mode.
Value investors use P/B to spot companies trading near or below the accounting value of their net assets, and it is a core valuation measure for banks, insurers and other asset-heavy businesses whose balance sheets are mostly financial assets marked close to market value. For asset-light companies — software, brands, services — book value understates what the business is worth, so high P/B ratios are normal there.
Take total equity, preferred equity and goodwill and other intangibles from the latest balance sheet (10-K or 10-Q), and use the diluted or basic common shares outstanding from the same report. Preferred equity is subtracted because it does not belong to common shareholders, and intangibles are subtracted for tangible book value because they usually cannot be sold separately.
With the default inputs, the price-to-book ratio is 3. Change any value above to recalculate instantly.
How to use the price to book ratio calculator
- 1Enter the current share price.
- 2From the latest balance sheet, enter total shareholders’ equity and any preferred equity.
- 3Add goodwill and intangible assets to see tangible book value.
- 4Enter common shares outstanding from the same report.
- 5Read the P/B ratio and compare it with peers in the same industry.
Formula and method
Book value per share is the common shareholders’ equity — total equity minus any preferred equity — divided by the number of common shares outstanding. The price-to-book ratio divides the market price by that figure; equivalently it is market capitalization divided by common book value.
Tangible book value also strips out goodwill and other intangible assets, which arise mainly from acquisitions and usually cannot be sold on their own. Price-to-tangible-book is widely used for banks and insurers. A P/B below 1 means the market values the company below the accounting value of its net assets.
- BVPS
- Book value per common share
- P/B
- Price-to-book ratio
- Shares
- Common shares outstanding
Worked examples
Industrial company at $45
$6 billion of equity over 400 million shares is $15 of book value per share, so a $45 price is 3.0× book. Removing $1.5 billion of goodwill leaves $11.25 of tangible book per share, a price-to-tangible-book of 4.0.
Stock trading below book
At $28 against $35 of book value per share, P/B = 0.8 — the stock trades at a 20% discount to its net assets, a classic value-investor screen.
Bank with preferred stock and goodwill
Common equity is $50 billion minus $5 billion of preferred, or $45 billion — $50 per share across 900 million shares, so P/B is 1.2. Taking out $10 billion of goodwill leaves $38.89 of tangible book per share and a price-to-tangible-book of about 1.54.
Frequently asked questions
What is a good price-to-book ratio?+
There is no universal number. Value investors traditionally look for P/B below 1 to 1.5, but averages vary widely by sector: banks often trade near 1 to 1.5 times book, while technology and consumer brands can trade at 5 to 10 times or more because their main assets are not on the balance sheet.
What does a P/B ratio below 1 mean?+
It means the market values the company at less than the accounting value of its net assets. That can be a bargain, but it often reflects expected losses, low returns on equity or doubts that the assets are worth their stated value.
How do you calculate book value per share?+
Subtract preferred equity from total shareholders’ equity and divide by the number of common shares outstanding. For example, $6 billion of equity with no preferred stock and 400 million shares is $15 of book value per share.
What is the difference between P/B and price-to-tangible-book?+
Price-to-tangible-book removes goodwill and other intangible assets from book value before dividing. It gives a more conservative picture for companies that have grown through acquisitions, and it is a standard valuation measure for banks.
Why can book value be negative?+
Large share buybacks, accumulated losses or big dividend payouts can push shareholders’ equity below zero even for profitable companies. When book value is negative the P/B ratio is meaningless, so use earnings or cash-flow multiples instead.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.