# Price to Book Value

Price-to-Book Value, popular P/BV is a financial ratio used to compare the market price of a company's stock to its book value per share.

The P/BV ratio is calculated by dividing the market price per share of a company's stock by its book value per share. Book value per share is calculated by taking the company's total book value and dividing it by the number of outstanding shares of its stock.

A higher P/BV ratio may indicate that a company is overvalued, while a lower P/BV ratio may indicate that a company is undervalued.

Example:

Amazon's P/BV ratio as of the end of the fourth quarter of 2021:

• Market price per share: \$3,163.49
• Book value per share: \$517.95

To calculate the P/BV ratio, you would divide the market price per share by the book value per share:

P/BV Ratio = Market Price per Share / Book Value per Share

P/BV Ratio = \$3,163.49 / \$517.95

P/BV Ratio = 6.10In this example, Amazon's P/BV ratio is 6.10 as of the end of the fourth quarter of 2021. This suggests that the market is willing to pay a price that is 6.10 times the book value per share for Amazon's stock.