# Price to Book Calculator

Price to Book Calculator is a tool that measures a company's market price in relation to its Book Value

Price To Book Ratio:
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Background Information

What does Price-To-Book Ratio mean?
The Price-To-Book Ratio denotes how much equity investors are paying for each dollar in net assets. The book value is located on a company's balance sheet under the name "stockholder equity". It represents the total amount that would be left over if the company liquidated all of its assets and repaid all of its liabilities
Formula
Price-To-Book Ratio = Stock Price / Book Value per share
Example

Balance Sheet for Company ABC
(Year ending December 31, 2010)

Assets
Cash1,000
Accounts Receivable500
Inventory500
Liabilities
Accounts Payable500
Current Long-Term Debt500
Total Current Liabilities1,000
Long Term Debt500
Total Liabilities1,500
Owners' Equity500

According to the formula:-

• Book value: 2,000 - 1,500 = 500
• Book value per share: 500 / 100 = $5 • P/B ratio =$6 / \$5 = 1.2