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Price to Book Ratio

Price to Book Ratio Definition

Used to determine how aggressively a stock is being priced in the market. A price-to-book ratio of more than 1.0 for stocks is common, and simply means a stock is selling for more than its book value. It is not uncommon to find stocks trading at three to five times their book values in a strong market. Value investors would probably look for a price-to-book ratio of around 1.0, in order to consider a stock reasonably priced.

Price-to-book Ratio = Market price of common stock / Book value








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