Market To Book Ratio Là Gì

Will Kenton is an expert on the economy & investing laws và regulations. He previously held senior editorial roles at itlab.com.vn & Kapitall Wire & holds a MA in Economics from The New School for Social Retìm kiếm và Doctor of Philosophy in English literature from NYU." data-inline-tooltip="true">Will Kenton
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Will Kenton is an expert on the economy & investing laws & regulations. He previously held senior editorial roles at itlab.com.vn and Kapitall Wire and holds a MA in Economics from The New School for Social Retìm kiếm và Doctor of Philosophy in English literature from NYU.

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Peggy James is a CPA with over 9 years of experience in accounting và finance, including corporate, nonprofit, and personal finance environments. She most recently worked at Duke University và is the owner of Peggy James, CPA, PLLC, serving small businesses, nonprofits, solopreneurs, freelancers, và individuals.

What Is the Book-to-Market Ratio?

The book-to-market ratio is one indicator of a company"s value. The ratio compares a firm"s book value to lớn its market value. A company"s book value is calculated by looking at the company"s historical cost, or accounting value. A firm"s market value is determined by its cốt truyện price in the stochồng market and the number of shares it has outstanding, which is its market capitalization.


The book-to-market ratio helps investors find a company"s value by comparing the firm"s book value khổng lồ its market value.A high book-to-market ratio might mean that the market is valuing the company"s equity cheaply compared to its book value.Many investors are familiar with the price-to-book ratio, which is simply the inverse of the book-to-market ratio formula.

Understanding the Book-to-Market Ratio

The book-to-market ratio compares a company"s book value to its market value. The book value is the value of assets minus the value of the liabilities. The market value of a company is the market price of one of its shares multiplied by the number of shares outstanding. The book-to-market ratio is a useful indicator for investors who need khổng lồ assess the value of a company.


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What Does the Book-to-Market Ratio Tell You?

If the market value of a company is trading higher than its book value per tóm tắt, it is considered to lớn be overvalued. If the book value is higher than the market value, analysts consider the company khổng lồ be undervalued. The book-to-market ratio is used khổng lồ compare a company’s net asset value or book value lớn its current or market value.


The book value of a firm is its historical cost or accounting value calculated from the company’s balance sheet. Book value can be calculated by subtracting total liabilities, preferred shares, and intangible assets from the total assets of a company. In effect, the book value represents how much a company would have left in assets if it went out of business today. Some analysts use the total shareholders" equity figure on the balance sheet as the book value.

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The market value of a publicly-traded company is determined by calculating its market capitalization, which is simply the total number of shares outstanding multiplied by the current tóm tắt price. The market value is the price that investors are willing to pay to lớn acquire or sell the stochồng in the secondary markets. Since it is determined by supply and dem& in the market, it does not always represent the actual value of a firm.


How to lớn Use the Book-to-Market Ratio

The book-to-market ratio identifies undervalued or overvalued securities by taking the book value & dividing it by the market value. The ratio determines the market value of a company relative sầu lớn its actual worth. Investors and analysts use this comparison ratio to differentiate between the true value of a publicly-traded company and investor speculation.


In basic terms, if the ratio is above 1, then the stoông chồng is undervalued. If it is less than 1, the stoông chồng is considered overvalued. A ratio above 1 indicates that the stochồng price of a company is trading for less than the worth of its assets. A high ratio is preferred by value managers who interpret it khổng lồ mean that the company is a value stock—that is, it is trading cheaply in the market compared lớn its book value.


A book-to-market ratio below 1 implies that investors are willing lớn pay more for a company than its net assets are worth. This could indicate that the company has healthy future profit projections và investors are willing to lớn pay a premium for that possibility. Technology companies và other companies in industries that bởi vì not have a lot of physical assets tkết thúc to lớn have a low book-to-market ratio.


Difference Between the Book-to-Market Ratio và Market-to-Book Ratio

The market-to-book ratio, also called the price-to-book ratio, is the reverse of the book-to-market ratio. Like the book-to-market ratio, it seeks to lớn evaluate whether a company"s stock is over or undervalued by comparing the market price of all outstanding shares with the net assets of the company.


A market-to-book ratio above sầu 1 means that the company’s stoông chồng is overvalued. A ratio below 1 indicates that it may be undervalued; the reverse is the case for the book-to-market ratio. Analysts can use either ratio lớn run a comparison on the book & market value of a firm.