Define: Price-To-Book Value

UK Accounting Glossary

Definition: Price-To-Book Value



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Full Definition of Price-To-Book Value


Price-to-Book Value measures the value of a company against the book value of its assets (as shown on its balance sheet).

Price-to-Book Value = Share Price / Net Asset Value (NAV)

Asset values shown in the balance sheet are based on the purchase prices of the assets and the principal of accruing the costs to the profits they generate.

Because the value of assets shown in the accounts does not necessarily reflect either the market value of its assets, or their value to the company (which depends on what effect they have on future cash flows), the Price-to-Book Value ratio is not widely used.

Price-to-Book Value is most often useful with sectors in which the value of a company depends largely on what assets it owns and those assets are accurately recorded in the accounts. These sectors include investment trusts and property-based companies.


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Definition Sources


Definitions for Price-To-Book Value are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 23rd March 2020.