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What is Price-Book Value ratio (P/B)?

A valuation ratio used by investors which compares a stock’s per share price to its book value (Shareholder’s Equity)

P/B= Market Price/Shareholder’s Equity per share

Generally P/B valuation is used for more capital intensive or finance related business. If any stock is trading below their book-value is considered undervalued. That means stock which have P/B ratio is less than 1, is considered undervalued.