Price to Book Value (P / BV) is a financial ratio used to assess the relative price of a stock compared to the book value per share. Essentially, it tells you how much you have to pay in order to get access to 1 share worth of book value. P / BV is used as a measure of whether a stock is intrinsically over or undervalued, because it reflects the value of the company were it to be liquidated (i.e. book value).

P / BV is used when comparing publicly traded companies to see at what multiple of book value it is acceptable to be trading at. As such, it is extremely useful in fundamental analysis and intrinsic valuation in comparable analysis but, as with most multiples, should be used only between similarly sized companies in the same industry.

Related Terms

Return to Finance Dictionary

WallStreet Prep Master Financial Modeling