book to market ratio


A stock's book value divided by its market value. Book value is calculated from the company's balance sheet, while market value is based on the price of its stock. A ratio above 1 indicates a potentially undervalued stock, while a ratio below 1 indicates a potentially overvalued stock. Technology companies and other companies in industries which do not have a lot of physical assets tend to have low book to market ratios.

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book shares price to book ratio