Compares a firm's market capitalization to its book value.
Formula: P/B = Price / Book Value Per Share
How to read it: < 1.0 often signals deep value — you're buying assets below replacement cost. Graham recommended ≤ 1.5 for defensive investing. Asset-light businesses (software, services) naturally trade at 5–20×.
Essential for value investors, it shows how much equity investors are paying for the net assets of a company. A P/B under 1 often signifies deep value.