Price-to-Book ratio, P/B ratio, is a financial ratio used to compare a company book value to its current market price. Book value is an accounting term denoting the portion of the company held by the shareholders ( the company's total tangible assets less its total liabilities ). In short, it means how much the stock is worth right now if somebody liquidated the company. The formula to calculate the P/B ratio is as followed :-
P/B ratio = Stock Price / Book Value Per Share
= Market Capitalization / Book Value of Equity
Book Value Per Share = ( Stockholders Equity - Preferred Stock ) / (Average Outstanding Shares )
Market Capitalization = Shares Outstanding * Market Price per Share
Book Value of Equity = Book Value of Assets - Book Value of Liabilities = Shareholders Equity
A lower P/B ratio 2007 Annual Report
As of 17th Oct 08, DBS Share price = $13.00
Book Value Per Share = $13.20
P/B ratio = $13.00 / $13.20
= 0.98x
