price to book ratio
DefinitionA stock's capitalization divided by its book value. The value is the same whether the calculation is done for the whole company or on a per-share basis. This ratio compares the market's valuation of a company to the value of that company as indicated on its financial statements. The higher the ratio, the higher the premium the market is willing to pay for the company above its hard assets. A low ratio may signal a good investment opportunity, but the ratio is less meaningful for some types of companies, such as those in technology sectors. This is because such companies have hidden assets such as intellectual property which are of great value, but not reflected in the book value. In general, price to book ratio is of more interest to value investors than growth investors.
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price to book ratio is ...
... part of the Stocks and Investor Relations subjects.
... part of the Stocks and Investor Relations subjects.
Related Terms
price to book ratio appears in the definitions of these other terms on BusinessDictionary.com
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