10 stock analysis ratios used by the pros
Price-to-Book
This ratio focuses on what would be retained if the business was sold off immediately. It takes the total assets and subtracts the total liabilities to produce the ‘book’ value, the amount that would be left if everything was liquidated.
Note that intangible assets (brands, patents) are ignored in the book value as they are difficult to value and sell.
A lower Price-to-Book will be attractive as an investor will not be paying too much for the potential left overs of a company in the case of bankruptcy.
Formula:
Price-to-Book= Market Capitalisation/Book Value
This document is purely education and is not investment advice. UK Investor Magazine accepts no liability for action taken on the back of reading this document.
Terms & Conditions: Please view the full terms and conditions of the UK Investor Magazine before reading this guide. This guide was compiled along side investment professionals to give you the best educational experience. The document you will receive is designed to increase your knowledge and understanding but is not specific investment advice. All investments carry risk. By submitting your details you agree to be contacted by UK Investor Magazine and our partners in relation to financial information and educational tools. We accept not responsibility and will not be held liable for any losses arising from submitting your details and receiving this guide.
Download the 10 Ratios guide for free below.