The price-to-book ratio (P/B ratio) divides a company’s current share price by its book value per share — the company’s net assets (total assets minus total liabilities) divided by shares outstanding. It compares what the market is paying against what the company’s own balance sheet says it’s worth.
For example, a stock trading at RM3.00 with a book value per share of RM2.00 has a P/B ratio of 1.5 — the market is valuing the company at 1.5 times its net asset value.
P/B is most useful when screening asset-heavy sectors such as banks and property, where net assets are a meaningful proxy for company value, and less useful for asset-light businesses where most of the value sits in intangibles the balance sheet doesn’t fully capture. See the PE ratio entry for the earnings-based counterpart most commonly paired with it.