Price/Book ratio (P/B)

P/B compares share price to book value per share (equity per share). It shows how much premium the market pays over the accounting substance. Example: Price $60, book value per share $30 → P/B = 2. The market pays twice the accounting equity. Watch out: P/B works best for banks, insurers and industrial firms with lots of tangible assets. For software or brand-heavy firms it's less meaningful because most value sits in intangibles (brand, know-how) that don't appear on the balance sheet.