Market-to-Book (P/B)

Andre Tester Market-based ratios Also available:

Market-to-Book (P/B)

Formula:
Market Capitalization / Book Value of Equity

Definition:
Measures how much the market values the company relative to its accounting net assets.

Interpretation:

> 1 → Market expects value creation

< 1 → Market believes assets are impaired or underperforming

📌 Strongly affected by: Leverage, Asset write-downs and Accounting policies