Price to book ratio, also known as PB ratio in the stock market, is explained simply in this 5 minute video! Price/book ratio is a valuation metric investors use to value a company based on the book value of that company's assets! Book value is a measure of how much the company would be worth today, if they sold off all their assets and paid back all their liabilities. This only includes tangible assets, so it is not useful to use for companies that derive their value from intangible assets, such as technology companies! To calculate the price to book ratio, the current share price is divided by the book value per share. Book value per share can be found by dividing the company's book value by the number of shares outstanding in the business. PB ratio can sometimes reveal red flags in the underlying business. One of which may be when the PB ratio is less than one. This means that the stock is trading at less than the book value of the company, which could mean it's undervalued, or that it is an over priced business. Another red flag is if a company currently has a negative price to book ratio. This means the company is insolvent, and has more in liabilities than they do in assets! This video is part of my Stock Market Basics playlist. 🔔 Subscribe for more videos! https://www.youtube.com/channel/UC_b9Qu9uX0Ky6YZWvwIY5-w?sub_confirmation=1 🕒 Time Stamps! 00:00 Intro 00:22 Price to Book Ratio Explained 01:15 PB Ratio Calculation 02:04 Example 03:35 P/B Ratio Less Than 1 04:31 Negative P/B Ratio 05:00 Finding PB Ratio 05:30 Thanks for Watching! 💻 Check out the Stock Market Basics Playlist for more videos like this! 💬 Drop me a comment if you have a question! 👍 Smash like for the YouTube algorithm! *Disclaimer* This channel is for entertainment purposes only and is not investment advice. All videos published on this channel are informational in nature and are not intended to give advice or recommendations about any particular security or investment. Before making any investment decisions, I would recommend you to speak to a financial professional that is qualified to provide advice.