P/B ratio

The price-to -book ratio (KBV, . Engl P / B ratio, or P / BV ) is a value-oriented Measure of stock market valuation of a corporation. In this case, the price of an individual share in relation will be provided to their proportionate book value:

Example: After the quarterly reports, the company has a book value of 5.5 billion euros. 201 million shares of the company are in circulation. So we get a book value of 27.36 euros per share. This value now divides the current share price of 25 Euros and there is a PBV of 0.91.

The traditional theory of value investing implies that a stock is even cheaper, the lower their KBV, and that their fair value approximates the carrying value corresponds to (see also: Market value to book value ratio). More modern valuation methods are based instead on metrics such as cash flow ( DCF ) method and price-earnings ratio.

Limitations

The KBV considers only the recognized carrying value. In this case, the hidden reserves, as well as the hidden losses, which are called Passivia a company, not included. In particular, in investment and real estate companies, there are therefore often return a corrupted value.

A more meaningful measure that is based on the actual market value of the assets, the net asset value (English Net Asset Value, NAV), and according to the NAV per share.

• Share code