The Market-to-Book Ratio, also known as the market to book ratio, is a financial metric that compares a company’s current market value to its book value. It is calculated by dividing the market capitalization by the book value of equity. This ratio provides insights into how investors perceive the company’s growth potential relative to its accounting value. A higher market to book ratio indicates that the market values the company more than its book value.
Get Your FREE Exam Secrets Cheat Sheet!
Plus a 3-Part CMA Video Course
82,000+ accounting and finance pros got their free CMA cheat sheet.
Get yours too, today!