Question

What is the best Price to Book ratio? Why?

A. A Price-to-Book ratio = 2

B. A Price-to-Book ratio = .5

C. A Price-to-Book ratio = 1

D. A Price-to-Book ratio= 0

E. A Price-to-Book ratio= -15.0

Answer 1

Option (C) i.e. Price to Book ratio =1 is the correct answer

Price-to-Book ratio compares a company's market value, to its book value. It compares the company's stock price to its book value per share (BVPS). The market capitalization (company's value) is its share price multiplied by the number of outstanding shares. The book value is the total assets - total liabilities.

Price to Book ratio of 1 indicates that the shares of the company are fairly and cprrectly priced and that the share price is showing the true picture of company's Net worth.

Incase of any doubt, please comment below. I would be happy to help.
Show your appreciation by upvoting the answer if it was of help to you.