Understanding the P/B ratio

Valuation metrics refer to the tools used to evaluate the financial strength of companies and are computed by making calculations using the data disclosed in the balance sheet, income statement and cash-flow statement. These ratios assess companies' profitability, liquidity, operational efficiency and stability, thereby providing investors with in-depth information on companies. By leveraging the power of ratio analysis, investors can make well-informed decisions. The price-to-book ratio (P/B ratio) is a commonly used tool by value investors. Unlike the P/E ratio which mainly focuses on a company's earnings, the P/B ratio lo

This article was originally published on November 25, 2020.