What is price-to-book (P/B)?
In short: the price-to-book (P/B) ratio is a company's share price divided by its book value per share — the net assets on its balance sheet, after subtracting liabilities. A P/B of 1 means the market values the company at exactly what its accounts say its net assets are worth.
How is price-to-book calculated?
Price-to-book is calculated by dividing the share price by book value per share. Book value is the company's total assets minus its total liabilities, as recorded on its balance sheet, divided by the number of shares. Equivalently, it is the company's market capitalisation divided by its total shareholders' equity.
P/B = share price ÷ book value per share, where book value is total assets minus total liabilities, divided by the number of shares.
What does a high or low P/B mean?
Below 1, the market values the company at less than its recorded net assets — sometimes a bargain, often a sign investors doubt those assets or the returns they earn. A high P/B usually means the company earns high returns on its equity, or owns valuable things the balance sheet does not record, such as brands and software.
| Company | Price-to-book (4 October 2026) |
|---|---|
| Commonwealth Bank (CBA.AX) | 3.2 |
| BHP (BHP.AX) | 4.2 |
| Wesfarmers (WES.AX) | 11.0 |
Where P/B misleads
- Intangible-heavy businesses look expensive. Brands, software and customer relationships are mostly missing from book value.
- Buybacks shrink book value, pushing P/B up without the business changing.
- It suits asset-based businesses best — banks, insurers and property companies, whose balance sheets are mostly financial assets at close to market value.
How ShareSift uses it
On ShareSift, a price-to-book below 1.5 earns 12 of 100 points in the ShareSift value score.
Frequently asked questions
What is a good price-to-book ratio?
A P/B below 1.5 is a traditional value threshold, and below 1 means paying less than recorded net assets. But the right level depends on the business: a company earning high returns on equity deserves a higher P/B. Compare it with the company's return on equity and with its sector.
Why do banks use price-to-book?
A bank's assets are mostly loans and securities carried close to their market value, so book value is a meaningful measure of what the bank owns. For banks, P/B alongside return on equity is one of the most useful valuation measures.
Sources
- ASIC Moneysmart, Choose your investments — the Australian regulator's guide to assessing investments.
- Company figures: Yahoo Finance via ShareSift, as of 4 October 2026. They change daily.
This information is general in nature and does not take into account your objectives, financial situation or needs. ShareSift is not a financial adviser and does not hold an Australian Financial Services Licence. Companies named are examples of how the measure works, not recommendations. Consider whether any information is appropriate for you and seek independent advice before making an investment decision.