Price to Book (P/B) Ratio Calculator
The Price to Book (P/B) ratio compares a company's market price per share to its book value per share. It is commonly used to assess whether a stock is valued above or below its accounting equity on a per-share basis.
This calculator computes book value per share from total shareholders' equity and shares outstanding, then divides the market price per share by that book value. Use consistently prepared accounting inputs and note the limits described below.
Inputs
Results
Book Value per Share
$50.00
Price to Book (P/B) Ratio
1
| Output | Value | Unit |
|---|---|---|
| Book Value per Share | $50.00 | same as market price currency (e.g., USD) |
| Price to Book (P/B) Ratio | 1 | — |
Visualization
Methodology
We use standard accounting definitions: total shareholders' equity equals assets minus liabilities as reported in the balance sheet. Shares outstanding should reflect the diluted share count if you want a diluted P/B.
When equity is negative, book value per share will be negative and the P/B ratio is not directly interpretable as a 'times' multiple. Adjustments (intangible write-offs, preferred stock treatment, off-balance-sheet items) are often required for meaningful comparisons.
To support measurement quality and traceability, follow institutional controls and documentation practices consistent with ISO 9001 for quality management and NIST SP guidance for data integrity. These help ensure inputs and reported outputs are auditable and reproducible.
Worked examples
Example: Market price per share = 50.00 USD, Total shareholders' equity = 100,000,000 USD, Shares outstanding = 2,000,000. Book value per share = 100,000,000 / 2,000,000 = 50.00 USD. P/B = 50.00 / 50.00 = 1.0.
Example with negative equity: If equity = -10,000,000 and shares = 1,000,000, book value per share = -10.00. P/B of a positive market price divided by a negative book implies accounting insolvency signals and requires qualitative investigation.
Further resources
External guidance
Expert Q&A
What does a high P/B ratio mean?
A high P/B ratio typically indicates the market values the company's equity above its book value, which can reflect strong expected returns, intangible assets not on the balance sheet, or overvaluation. Interpret alongside profitability and asset quality.
When is P/B unreliable?
P/B is less reliable for companies with significant intangible assets, financial firms, or firms with volatile accounting values. Negative book value makes the ratio difficult to interpret. Use additional metrics such as ROE, EV/EBITDA, and asset adjustments.
Should I use basic or diluted shares?
Use diluted shares if you want a conservative, economically representative per-share basis. Ensure the shares outstanding input matches your chosen per-share denominator for consistency.
How precise are results?
The calculator performs arithmetic exactly to the input precision. Real-world accuracy depends on the quality of input data and accounting policies. Follow measurement and data integrity practices such as NIST SP recommendations and ISO quality standards for minimizing input errors.
Does this tool adjust for preferred equity or minority interests?
No. This calculator uses total shareholders' equity as reported. To account for preferred equity, minority interests, or other adjustments, modify the equity input before computing; consult accounting guidance for correct adjustments.
Sources & citations
- NIST — National Institute of Standards and Technology — https://www.nist.gov
- ISO — International Organization for Standardization — https://www.iso.org
- IEEE Standards Association — https://standards.ieee.org
- OSHA — Occupational Safety and Health Administration — https://www.osha.gov