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P/B ratio = Stock Price / Book Value per share. Book value: 2,000 - 1,500 = 500 (note that this is the same as owners' equity) Book value per share: 500 / 100 = $5. P/B ratio = $6 / $5 = 1.2. A P/B ratio of less than 1.0 can indicate that a stock is undervalued, while a ratio of greater than 1.0 may indicate that a stock is overvalued.
The price-to-tangible book value ratio excludes the book value of a company's intellectual property and other intangible assets, such as patents and goodwill. As such, it represents what debtholders or investors would receive if the company liquidated its physical assets (assuming that it could get book value for all of those assets).
Calculated as the following; Price-to-Earnings Ratio (P/E) = Market value per share / Earnings Per Share (EPS) Moving on from the basics, let us do a sample calculation with company XYZ that currently trades at $100.00 and has an earnings per share (EPS) of $5.00. Using the previously mentioned formula, you can calculate that XYZ’s price-to ...
The Price-to-Book Ratio (P/B Ratio) is the comparison of a company's market capitalization (or market value) to its book value. Here's how to calculate the P/B ratio: Taking Microsoft, for example, we can take the market cap of 1.89 trillion, and divide it by the $124 billion book value, resulting in a P/B Ratio of 15.24. A P/B ratio over 1.0 ...
Book value and fair value are both used to place a value on an asset, but the difference lies in the way that price is determined: Book value is the carrying value of an asset, which is its original cost minus depreciation, amortization, or impairment costs. It is an estimate of what the asset is worth on the company’s balance sheet – but ...
14) Price-to-Book (P/B) Ratio . The price-to-book ratio is a measure of a company’s share price in relation to its book value of shareholders’ equity, indicating the price investors must pay for each dollar of book value. Like the price-to-earnings ratio and price-to-sales ratio, this relative metric is better suited for comparisons against ...
For example, let's say Company XYZ has $40 million of assets, 10 million shares outstanding and a current share price of $3. Using the formula, we can calculate that Tobin's Q is: Tobin's Q = (10,000,000 x $3) / $40,000,000 = 0.75. James Tobin, a Nobel Prize winner in economics and a professor at Yale University, developed the ratio after ...
A company's book-to-bill ratio measures the company’s ability to fulfill client orders. Therefore, a company that can fulfill its orders at the pace at which orders arrive would have a book-to bill ratio of 1. To illustrate, suppose Company E receives 200 orders (booked) for widgets. Company E subsequently ships widgets for all 200 orders ...
The price-to-book ratio measures a company's share price relative to its book value, revealing the price investors must pay for each dollar of book value. How to Calculate Price-to-Book Ratio. The resulting value is used for comparisons against other companies and industries. 5. Debt Ratio. The debt ratio measures a company’s debt relative to ...
In general, a price multiple ratio looks like this: Price multiple = Price / Performance Metric. For example, Company XYZ has revenue of $20,000,000 per year. It has 1,000,000 shares outstanding. Today, the company’s stock price is $20 per share. Using the formula above, we can calculate Company XYZ's price-to-revenue multiple: