Enter the total market capitalization and the total book value. The calculator will evaluate and display the market to book value.

Market to Book Value Formula

The following equation is used to calculate a market-to-book value ratio.

MBV = MC / BV
  • Where MBV is the market-to-book value ratio
  • MC is the market capitalization of the company
  • BV is the book value.

What is a Market-to-Book Value Ratio?

Market-to-Book Value Ratio (M/B) is a financial metric used to assess the relationship between a company’s market value and its book value.

The market value represents the current market price of a company’s shares. In contrast, the book value represents the net value of a company’s assets, calculated by subtracting liabilities from total assets.

This ratio is important as it provides insights into how the market perceives a company’s worth of its accounting value.

A high M/B ratio indicates that investors value the company more highly than its book value, suggesting positive market sentiment and potential future growth.

A low M/B ratio suggests that the company is undervalued or facing challenges, potentially indicating an investment opportunity.

The M/B ratio is particularly relevant for investors and analysts as it helps in evaluating a company’s financial performance and making investment decisions.

It allows investors to compare a company’s market value to its book value, indicating whether the stock is overpriced or underpriced. By comparing the M/B ratio of a company to its industry peers or the overall market, investors can identify potential investment opportunities or market trends.

Market to Book Value Example

How to calculate market-to-book value?

  1. First, determine the market cap.

    Calculate the total market capitalization of the company.

  2. Next, determine the book value.

    Calculate the total book value of the stock.

  3. Finally, calculate the market-to-book value.

    Use the equation above to calculate the market-to-book value.

FAQ

What is a market-to-book value?

A market-to-book value is the ratio of the market capitalization of a company to it’s book value.

market to book value calculator
market to book value formula