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Price to book calculator

Price to book is price over book value per share, the same ratio as market cap over book equity. A $50 share on $20 of book value is 2.50 times. With 100,000,000 shares that is $5,000,000,000 of market cap over $2,000,000,000 of book.

Price to book

2.50x

Market cap $5,000,000,000 over $2,000,000,000 of book equity.

Price per share
$50.00
Book value per share
$20.00
Market cap
$5,000,000,000
Book equity
$2,000,000,000
$
$

Book equity divided by the same share count. Not market cap.

In millions of shares. 100 here is 100,000,000 shares.

On this page

The formula

P/B=PBVPS=Market capBook equity\text{P/B} = \frac{P}{\text{BVPS}} = \frac{\text{Market cap}}{\text{Book equity}}

BVPS is book equity divided by shares. The two routes cancel the share count and have to agree.

Two routes, one multiple

Price to book is the share price over book value per share:

P/B=PBVPS=Market capBook equity\text{P/B} = \frac{P}{\text{BVPS}} = \frac{\text{Market cap}}{\text{Book equity}}

On a $50 share with $20 of book value per share, P/B is 2.50. With 100,000,000 shares, market cap is $5,000,000,000 and book equity is $2,000,000,000. Divide those two and the ratio is 2.50 again.

The calculator on this page is both routes. How price to book works owns the multiple. How book value per share works owns the $20.

At book, the multiple is 1

Keep the $50 price and 100,000,000 shares. Raise BVPS to $50. P/B is 1. Book equity is now $5,000,000,000, equal to market cap.

The share did not get cheaper. Book caught up with the price. A P/B of 1 is the accounting residual matching the market residual on this sheet, not a floor under the price.

A smaller count, a different book

Price $80, BVPS $40, shares 50,000,000. P/B is 2. Market cap is $4,000,000,000. Book equity is $2,000,000,000.

The 2.00 is not the first sheet's 2.50, and the firm is smaller. P/B hides scale the way P/E does. P/E against P/B is that pair. Do not paste this $2,000,000,000 of book onto the DuPont teaching equity. Different sheet, different firm.

What this page is not doing

It is not a liquidation value, not tangible book, and not a P/E. The three sheets are 2.50 times on $20 of BVPS, 1 times when BVPS is $50, and 2 times on an $80 share. This is educational material, not financial advice.

Worked examples

A \$50 share on \$20 of book

The share price is $50, book value per share is $20, and 100,000,000 shares are outstanding. What is P/B, and what is book equity?

  1. P/B is price over BVPS: 50/20=2.5050 / 20 = 2.50.
  2. Market cap: 50×100000000=500000000050 \times 100000000 = 5000000000, so $5,000,000,000.
  3. Book equity: 20×100000000=200000000020 \times 100000000 = 2000000000, so $2,000,000,000.
  4. The same P/B from the totals: 5000000000/2000000000=2.505000000000 / 2000000000 = 2.50.

P/B is 2.50. Market cap is $5,000,000,000. Book equity is $2,000,000,000. BVPS is $20.

The same price at book

Keep the $50 price and 100,000,000 shares. BVPS is now $50. What is P/B?

  1. P/B: 50/50=150 / 50 = 1.
  2. Market cap is still $5,000,000,000.
  3. Book equity: 50×100000000=500000000050 \times 100000000 = 5000000000, so $5,000,000,000.

P/B is 1. Market cap and book equity are both $5,000,000,000. BVPS is $50.

An \$80 share on \$40 of book

Price is $80, BVPS is $40, shares 50,000,000. What is P/B?

  1. P/B: 80/40=280 / 40 = 2.
  2. Market cap: 80×50000000=400000000080 \times 50000000 = 4000000000, so $4,000,000,000.
  3. Book equity: 40×50000000=200000000040 \times 50000000 = 2000000000, so $2,000,000,000.

P/B is 2. Market cap is $4,000,000,000. Book equity is $2,000,000,000. BVPS is $40.

The mistake that costs the most

Reading book value as what a break-up would raise.

Book is assets minus liabilities on the accounting records. Specialised plant, in-house brands, and research charged as an expense do not sit there at sale value. A P/B of 1 is not a floor under the share.

The other error is using market cap in the denominator. P/B is market over book. Book over market is the reciprocal, a different quote.

Common questions

Is a P/B below 1 a bargain?

It means the market residual is below the accounting residual on this sheet. Banks and asset-heavy names print that reading in the ordinary course. It is not a liquidation bid. This is educational material, not financial advice.

Book equity or tangible book?

This page is book equity, assets minus liabilities. Tangible book takes identifiable intangibles out. Type the book your sheet is using.

Why is this not P/E?

P/E divides by a year's profit. P/B divides by the accounting residual. A profitable firm with thin book can print a high P/B and a modest P/E at once.

Keep reading

This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.