Book Value Ratio Formula Example

To find out the p b ratio formula we need the market price per share and book value per share.

Book value ratio formula example. In the above example we know both. In this case the book value per share for this soda company would be 0 11. Book value per share.

Price to tangible book value share price tangible book value per share for example let s assume that company xyz has 10 000 000 shares outstanding which are trading at 3 per share. Using the p b ratio formula we get p b ratio formula market price per share book value per share. We can apply the values to our variables and calculate the book value per share.

The market to book formula is. One of the limitations of book value per share as a valuation method is that it is based on the book value and it excludes other material factors that can affect the price of a company s share. Or p b ratio 105 84 5 4 1 25.

You can use this book value calculator. Drawbacks of book value per share. For example apple had this ratio ranging around 9 as of october 2018 and amazon ranged around 20.

Where net book value total assets total liabilities. Bvps dfrac 9 600 000 3 090 000 61 500 000 0 11. The company also recorded 15 000 000 of tangible book value last year.

Book value per share will be bvps 495 61 book value calculator. The market to book ratio is calculated by dividing the current closing price of the stock by the most current quarter s book value per share. It may possibly be worth 10 times the book value.