Worked Example of the Month - April 2009

Price to book ratio

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Price to Book Ratio
This workbook shows the Ratio between the value of the shares and the company’s net worth. This is a key indicator of the market’s valuation of a company, since the value of the openly traded shares should exceed the net worth of the company. 

The Ratio changes depending on the industry, but generally a ratio of 2.0 – 5.0 is healthy.






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