What is the ratio of market to book?
This article discusses the formula and market-to-book-ratio. This ratio is an important indicator of a company’s value, so it may be of interest to business owners or people who evaluate businesses. This ratio can help an investor decide whether a company or stock is worth their investment. It will tell them if a company is overvalued, undervalued or just right.
To put it simply, this is a metric important for figuring out a business’s book value vs its market value, as the name suggests. This is a complex concept, so let’s expand on it. The book value is the amount shareholders will receive from the liquidation a certain company or business. Market value is the price at which the market values the company. In the end, the ratio will calculate the total worth of a business. It is acceptable to use a ratio of book-to-market. This ratio measures the same thing, as long as you know which ratio is being used. Both types are important. The price-to-book (or similar) ratio is another name for this concept.
The ratio is attractive because it shows how…
