Price-to-book ratio or P/B ratio, is a ratio used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value. Book value is the shareholders' equity (assets minus liabilities) divided by the total number of outstanding shares. The calculation is often done using 'per share' values for both price and book. Also known as the "price/equity ratio" (which should not be confused with P/E or price/earnings ratio); or the market cap divided by shareholders' equity.
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