Market To Book Value Per Share Formula
The market to book formula is.
Market to book value per share formula. Book value per share is also used in the return on equity formula or roe formula when calculating on a per share basis. When compared to the current market value per share the book value per share can provide information on how a company s stock is valued. The formula is represented as 2 market to book ratio formula market capitalization total book value.
The ratio compares a firm s book value to its market value. The first formula needs per share information whereas the second one needs the total values of the elements. A company s book value is calculated by looking at the company s historical cost or accounting value.
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. Market to book ratio formula. In contrast to book value the market price reflects the future growth potential of the company.
Roe is net income divided by stockholder s equity. Market price per share book value per share. Market capitalization book value.
Either of the above formula can be used for calculating the ratio. The book value per share is a little more complicated. Where net book value total assets total liabilities.
The price to book ratio formula is calculated by dividing the market price per share by book value per share. Here s the formula of price to book value price to book value ratio market price per share book value per share. A firm s market value is.