Price-to-Book Ratio
Market cap divided by book value (total assets minus liabilities). Compares market price to the company's net asset value.
Formula
P/B = Market Cap / (Total Assets − Total Liabilities)
How to Interpret
Below 1x means the market values the company below its liquidation value — could be undervalued or distressed. Banks typically trade at 1-2x book. Tech companies often 10x+ because their value is in intangibles (IP, brand, network effects).
Why It Matters
P/B is most useful for asset-heavy industries (banking, real estate, manufacturing). It's less relevant for tech companies where most value comes from intangible assets that don't appear on the balance sheet.
R40 does not publish Price-to-Book Ratio per company. This entry explains the measure; the metrics R40 tracks and ranks are listed on the indicators index.