Price-to-Book

(redirected from Price to Book Value Ratios)

Price-to-Book

A ratio of the share price of a publicly-traded company to its book value per share, which is the company's total asset value less the value of its liabilities. The P/B is a ratio of investor sentiment on the value of a stock to its actual value according to the Generally Accepted Accounting Principles. A high P/B means either that investors have overvalued the company, or that its accountants have undervalued it.
References in periodicals archive ?
The results of this research reveal that brand value is significant in explaining variations in the price to book value ratios over and above the explanatory power of variables that are typically thought to be related to price to book value differentials.
Because of the dichotomous grouping of companies, the total sample of "brand value" and "zero brand value" companies allow for tests of the representational faithfulness of balance sheets, as represented by variations in price to book value ratios.
If one accepts the premise that high price to book value ratios are sometimes indicative of the systematic under-reporting of assets, then our findings suggest that the balance sheets of companies with high brand value may not be representationally faithful due to the omission of some measure of brand value.