Price-to-Book (P/B)

Price-to-Book (P/B) is a ratio that compares a company's stock price to its book value—basically what the company's assets are worth on paper after subtracting debts. You calculate it by dividing the stock price by the book value per share. You'll see P/B used when evaluating whether a stock is cheap or expensive, especially for asset-heavy businesses like banks or manufacturers. A lower P/B might suggest the stock is undervalued, while a higher one could mean investors are paying a premium. For example, if TechCorp trades at $50 per share with a book value of $25 per share, its P/B is 2.0—meaning you're paying $2 for every $1 of assets. Keep in mind P/B works better for some industries than others.