P/B
Price / Book
Short definition
P/B is equity market value over book equity. It coarsely reflects ROE versus Ke; historical cost and goodwill break the denominator.
Detailed explanation
Inflation understates book and lifts P/B. A goodwill impairment shrinks the denominator and gaps P/B. P/B is used more in banks and holdings because assets sit closer to fair value.
P/B < 1 can mean ROE < Ke or asset quality/a discount; it is not automatically “cheap”.
Why it matters for the CFO
In squeeze-out and net-asset debates, book is one anchor; the market is another.
How it is calculated
F/D = Özkaynak değeri / Defter özkaynağı
Variables in the formula
- P/B: Market equity ÷ book equity
How to read it
P/B of 1.5x is a price of 1.5 times book. Sector and inflation move “normal”.
Numerical example
Equity value 800, book equity 500 → P/B = 1.6x.
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Definitions are educational. They are not investment, credit or tax advice.