Market To Book Value Ratio Formula

1 market to book ratio formula market value of stock book value per share on the other hand it can also be calculated by dividing the market capitalization by the total book value or tangible net worth of the company.

Market to book value ratio formula. The book to market ratio identifies undervalued or overvalued securities by taking the book value and dividing it by the market value. The formula is represented as 2 market to book ratio formula market capitalization total book value. And some of the most important uses are as follows.

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. Dividend yield total dividend paid in a year number of shares outstanding. The usage of market value ratios is varied.

The market price per share is simply the current stock price that the company is being traded at on the open market. Market to book ratio market capitalization book value. The ratio determines the market value of a company relative to.

Market value ratios uses. Share price net book value per share. Market to book ratio price of one share book value of one share.

Above equation rephases by the most investors to form the book to market ratio formula by the division of total book value of the company by the total market value. Market value per share market capitalization outstanding shares in the market. The inverse of the market to book ratio is the book to market ratio.

Companies use the price to book ratio p b ratio to compare a firm s market capitalization to its book value. The book value per share is a little more complicated. Where net book value total assets total liabilities.