Price-to-Book Ratio: Eleven Balance Sheets, Checked

Michael Whitman · Trading since 2017, full-time since 2020 · Published 2026-09-27

Price-to-book is the valuation ratio that looks at the balance sheet instead of the income statement. Where the P/E ratio asks what investors pay for a year of profit, P/B asks what they pay for the net assets the company’s accounts record: everything it owns minus everything it owes.

This page shows the formula, works it on JPMorgan Chase, then measures eleven large US companies from their own SEC filings, and explains why the ratio is useful for some of them and close to meaningless for others.

How it works

The formula. P/B = market value / shareholders’ equity. Per share, it is the same thing: share price / book value per share, where book value per share is shareholders’ equity divided by the shares outstanding.

• Book value is shareholders’ equity: total assets minus total liabilities, as recorded on the balance sheet. This page uses the equity attributable to the parent company’s shareholders, the line companies report as stockholders’ equity.
• Market value is the share price times the shares outstanding, the same figure as the market cap.

A P/B of 1.0 means the market values the company at exactly its recorded net assets. Above 1.0, investors pay more than the accounts show, usually because the business earns a return on those assets or owns things the accounts do not record. Below 1.0, they pay less, which can mean the assets are thought to be worth less than their recorded amount.

Why the accounts miss so much. Most assets are recorded at what they cost, less depreciation, not at what they are worth today. A brand built through years of advertising, software written by the company’s own staff, and a trained workforce appear on the balance sheet at little or nothing. A bank’s loans and securities, by contrast, are close to the whole business and are recorded much nearer to their worth than a brand or a factory.

A worked example

JPMorgan Chase at 30 Jun 2026, from its 10-Q filed 6 Aug 2026, and its close of $343.06 on 25 Sep 2026:

• Stockholders’ equity: $374.598 billion
• Shares outstanding (cover page, as of 30 Jun 2026): 2,658,186,195

Two ways to the same ratio:

1. Book value per share: $374.598 billion / 2,658,186,195 shares = $140.92.
2. P/B from the share price: $343.06 / $140.92 = 2.43.
3. Market value: $343.06 x 2,658,186,195 = $911.9 billion, and $911.9 billion / $374.598 billion = 2.43.

Read plainly: investors were paying $2.43 for each dollar of net assets on JPMorgan’s balance sheet. For a bank that is a meaningful comparison, because its assets are mostly loans and securities that the accounts record close to what they are worth.

One detail changes the figure. JPMorgan’s stockholders’ equity includes $21.040 billion of preferred stock. Leaving it out, to count only what belongs to common shareholders, gives $133.01 a share and a P/B of 2.58.

The original data

Eleven large companies, each with book value from its latest balance sheet in the SEC’s XBRL company facts, downloaded 27 Sep 2026, and market value from the 25 Sep 2026 close times the shares on the filing’s cover page. Balance sheet dates differ because fiscal quarters differ. For Coca-Cola and Exxon Mobil the company facts file still stopped at the first quarter, so their rows use the second-quarter 10-Qs they filed on 29 Jul and 3 Aug 2026, read from those filings’ own XBRL data.

The ten with positive equity ran from 2.43 to 46.29, Apple’s ratio 19.0 times JPMorgan Chase’s, with a median of 8.69. The two lowest, JPMorgan Chase and Exxon Mobil, are the two whose main assets, loans and securities for one and oil fields and refineries for the other, are recorded on the balance sheet. Every value is in the price-to-book table.

Amazon had the most book value of the eleven, $551.620 billion, 24.7% more than Microsoft’s, yet its P/B of 4.88 was lower than Microsoft’s 8.66, because Microsoft’s market value was higher on the smaller equity base.

Where the ratio is useful

Banks and insurers. Their balance sheets are made of financial assets and liabilities recorded close to what they are worth, so book value is a reasonable estimate of what the business holds. That is why the ratio tells you most about them.

Asset-heavy businesses. Oil producers, utilities and property companies own physical assets that do most of the earning. Book value still understates them, because those assets are recorded at cost, but the gap is narrower than for a software company.

Against the company’s own history. A P/B far below a bank’s usual level can mean the market doubts the recorded value of its loans. That is a question to investigate, not an answer.

When it fails

It fails when buybacks shrink the denominator. A company that buys back its own shares pays cash out and lowers its equity by the same amount. Apple’s stockholders’ equity was $134.047 billion at the end of its fiscal 2017, the highest of any year from fiscal 2014 to 2025, $50.672 billion at the end of fiscal 2022, the lowest, and $73.733 billion at the end of fiscal 2025, 45.0% lower, while it spent $650.576 billion on share repurchases across fiscal 2018 to 2025. A P/B of 46.29 reflects that shrunken denominator as much as the share price. Every year is in the Apple equity and buyback table.

It fails completely when equity is negative. McDonald’s equity was $12.853 billion at the end of 2014 and $7.088 billion at the end of 2015, and it has been below zero at every year-end since 2016. Across 2015 and 2016 the company spent $17.270 billion buying back its own shares. At 30 Jun 2026 it was -$1.023 billion. Dividing a positive market value by a negative book value gives a negative number that says nothing about value. The McDonald’s equity table has each year.

It fails when the valuable assets were never recorded. Nvidia’s 23.69 and Coca-Cola’s 10.45 reflect chip designs and a brand that sit on the balance sheet at a fraction of what they earn. A low P/B screen will rarely pick such companies, whatever their prospects.

It fails across sectors. A P/B of 2.43 for a bank and 8.66 for a software company say nothing about which is cheaper. Comparisons work within a sector, where the balance sheets are built the same way.

And the numbers are not taken on the same day. The market value is from 25 Sep 2026; the equity is from each latest balance sheet, dated from 10 May 2026 (Costco) to 31 Jul 2026 (Walmart).

Related

Shareholders’ equity explains what book value is made of, and the balance sheet is where it comes from. The P/E ratio is the earnings counterpart, and return on equity links the two, since P/B divided by P/E equals return on equity. Value investing is the approach that has used low P/B longest, and intrinsic value covers the harder question the ratio only approximates.

This page is educational, not financial advice. Test every idea on your own charts before risking money.