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Price to Book (P/B) Ratio Calculator

Calculate price to book ratio from stockholders' equity, preferred equity, shares, and share price, with tangible book value when intangibles are entered.

Published

P/B ratio
Price to book value
1.75×
Book value for common equity
$1,000,000,000.00
Book value per share
$20.00
Share price
$35.00
Tangible book value per share
$18.00
Price to tangible book
1.94×

$35.00 per share divided by $20.00 of book value per share gives a P/B ratio of 1.75×.

Common and preferred equity from the balance sheet.
$
Subtract preferred equity to estimate book value available to common shareholders.
$
$
Optional: subtract goodwill and other intangibles for tangible book value.
$

Results update as you type.

Price to Book (P/B) Ratio Calculator

Asset-backed valuation starts on the balance sheet, and the Price to Book (P/B) Ratio Calculator connects that book value to a market price. Book value is an accounting measure of equity, not a market forecast. This calculator starts with total stockholders’ equity, subtracts preferred equity, divides by shares outstanding, and then divides the share price by that book value per share.

This page is informational, not investment advice. P/B can be a useful valuation multiple, especially for asset-heavy companies, but it should not be used alone to decide whether to buy or sell a security.

How to use this calculator

Enter total stockholders’ equity from the balance sheet. Enter preferred equity if preferred shareholders have a claim that should be removed before estimating common equity value. Enter shares outstanding and the current share price. If you want a tangible book view, enter intangible assets such as goodwill and acquired intangibles. The calculator subtracts those intangibles from common book value and displays price to tangible book only when the tangible amount remains positive.

P/B is closely related to other valuation multiples, but each one asks a different question. Compare sales-driven valuation with the price to sales ratio calculator, growth adjusted earnings valuation with the PEG ratio calculator, and cash generation with the free cash flow calculator. For a balance-sheet liquidity check, the current ratio calculator looks at current assets and current liabilities rather than market price. If you are reviewing a bank or insurer, also check regulatory capital disclosures because accounting equity and regulatory capital are related but not identical.

Formula

The calculator uses common book value:

common book value=total stockholders’ equity−preferred equity\text{common book value} = \text{total stockholders' equity} - \text{preferred equity}

Then it converts that total into a per-share amount:

book value per share=common book valueshares outstanding\text{book value per share} = \frac{\text{common book value}}{\text{shares outstanding}}

The P/B ratio is:

P/B ratio=share pricebook value per share\text{P/B ratio} = \frac{\text{share price}}{\text{book value per share}}

For the optional tangible view:

tangible book value=common book value−intangible assets\text{tangible book value} = \text{common book value} - \text{intangible assets}

price to tangible book=share pricetangible book value per share\text{price to tangible book} = \frac{\text{share price}}{\text{tangible book value per share}}

Example: calculating price-to-book ratio

Use the default inputs: $1,000,000,000 of total stockholders’ equity, $0 of preferred equity, 50,000,000 shares outstanding, a $35 share price, and $100,000,000 of intangible assets.

Common book value is total equity minus preferred equity:

common book value=1,000,000,000−0=1,000,000,000\text{common book value} = 1{,}000{,}000{,}000 - 0 = 1{,}000{,}000{,}000

Book value per share is $1,000,000,000 divided by 50,000,000 shares, or $20.00. The P/B ratio is:

P/B ratio=3520=1.75\text{P/B ratio} = \frac{35}{20} = 1.75

The tangible book value is $1,000,000,000 minus $100,000,000, or $900,000,000. Tangible book value per share is $18.00. Price to tangible book is $35 divided by $18, or 1.94× when rounded to two decimals. The result card therefore shows a primary P/B of 1.75×, book value per share of $20.00, tangible book value per share of $18.00, and price to tangible book of 1.94×.

Interpretation and benchmarks

A P/B ratio of 1 means the market price equals accounting book value per share. A ratio above 1 means investors are paying more than recorded equity; that can be reasonable if the company earns strong returns on equity, has valuable franchises, or owns assets carried below economic value. A ratio below 1 may look cheap, but it can also signal expected losses, asset quality problems, credit risk, or future write-downs.

P/B is most commonly used for businesses where assets and equity capital drive returns, including banks, insurers, lenders, asset managers, and some industrial or real estate companies. It is less useful for companies whose value is created mainly by internally developed software, brands, networks, or human capital, because those assets often do not appear fully on the balance sheet. In those cases, sales, earnings, and cash-flow multiples may explain valuation better.

Limitations and tips

Book value is an accounting figure. It can be affected by historical cost, acquisitions, impairments, accumulated other comprehensive income, buybacks, and industry-specific accounting rules. A company that repurchases shares above book value can reduce book value per share even if operations are healthy. A company with large goodwill may show positive book value but much lower tangible book value. The calculator intentionally shows both views when possible.

Do not compare P/B across unrelated industries as if a single benchmark exists. Compare peers with similar business models, leverage, accounting standards, and return profiles. Also check profitability: a low P/B company that earns poor returns on equity may deserve a low multiple. P/B becomes more informative when paired with returns, credit quality, and management’s capital allocation record.

Formula sources and scope

  • Principles of Financial Accounting — OpenStax, Rice University (peer-reviewed open textbook); 2019 first edition, ISBN 978-1-947172-68-5; U.S. GAAP-oriented educational definitions. Supports: bookValuePerShare=(totalEquity-preferredEquity-intangibleAssets)/sharesOutstanding; P/B=sharePrice/bookValuePerShare. Accessed 2026-07-09.
  • Principles of Finance — OpenStax, Rice University (peer-reviewed open textbook); 2022 first edition, ISBN 978-1-951693-54-1; Jurisdiction-neutral finance definitions. Supports: bookValuePerShare=(totalEquity-preferredEquity-intangibleAssets)/sharesOutstanding; P/B=sharePrice/bookValuePerShare. Accessed 2026-07-09.

These sources support the stated formula or definition. Results remain estimates based on the entered values and do not replace financial, legal, tax, lending, or investment advice. Compare periods, units, accounting definitions, and jurisdiction-specific rules before acting.

Sources

Frequently asked questions

What is the price to book ratio?
The price to book ratio compares share price with book value per common share. It shows how much investors pay for each dollar of accounting equity after subtracting preferred equity from total stockholders' equity and dividing by common shares outstanding.
How do I calculate book value per share?
Subtract preferred equity from total stockholders' equity to estimate book value available to common shareholders. Then divide that amount by shares outstanding. This calculator requires positive common book value before calculating P/B and showing a usable valuation ratio clearly.
What is tangible book value?
Tangible book value subtracts intangible assets, such as goodwill and acquired intangibles, from common book value. The calculator shows price to tangible book only when tangible book value is positive; otherwise it flags the tangible value line for review separately.
Is a low P/B ratio good?
A low P/B can suggest a cheaper valuation, but it may also signal poor returns, asset write-down risk, financial stress, or an industry where recorded book value is not very informative. Always compare peers and profitability trends carefully.
When is P/B most useful?
P/B is often more useful for banks, insurers, lenders, and other asset-heavy businesses where balance-sheet equity is central to valuation. It is usually less informative for software, brands, and service companies driven by intangible assets and human capital.
How is price to tangible book different?
Price to tangible book uses tangible book value per share after subtracting intangible assets. It can be helpful for asset-focused comparisons, but it may understate companies whose economics depend on brands, software, customer relationships, intellectual property, or networks overall.

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