Companies use the price-to-book ratio to compare a firm's market to book value by dividing price per share by book value per share (BVPS). An asset's book value is equal to its carrying value on the balance sheet, and companies calculate it netting the asset against its accumulated depreciation.Book value is also the net asset value of a company calculated as total assets minus intangible assets (patents, goodwill) and liabilities. For the initial outlay of an investment, book value may be net or gross of expenses, such as trading costs, sales taxes, and service charges. PB ratio indicates how many times the company's equility is paid by the investor in it's share price.
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