Stock Market Glossary
KBV
Price-to-book value ratio – ratio of price to balance sheet equity per share.
In brief: Price-to-book value ratio – ratio of price to balance sheet equity per share.
Meaning in practice
A P/B ratio below one means a stock is trading below its book value. The P/B ratio is particularly relevant for intrinsic stocks and banks, but is often not very meaningful for highly intangible business models.
Context for investors and traders
When analysing a company, this term is meaningful only alongside the business model, industry and development across several reporting periods. One-off effects, accounting choices and the corporate cycle can move individual metrics.
How to use this in practice
Use the term first to describe the situation and add verifiable data: time frame, benchmark, costs and liquidity. Only then does it become an assessment that can be connected to an investment objective and risk budget.
What to keep in mind
Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.