In the stock industry, people often hear of proper nouns such as price-to-book ratio. Although they have a certain understanding, they will find that they are incapable of their ability and cannot master the systematic knowledge of the price-to-book ratio in the actual application process. So what does PB mean? Is the price-to-book ratio high or low? There is always no definite answer to such questions. Let’s understand together next.
What does PB mean?
Is the price-to-book ratio high or low? Professionals should provide professional knowledge to explain the former. PB is short for price-to-book ratio. In exchanges between investors, you can directly say PB, which can be said to be the price-to-book ratio. it is also fine. The price-to-book ratio refers to the value measured by the listed company on the company’s stocks. The calculation formula is to divide the price of the company’s stock by the net assets of each stock of the company. The value of the price-to-book ratio will be different every year. During the development of listed companies, the stock price and the net assets of each stock will change every year, and the calculated price-to-book ratio will also change. As long as it exceeds a certain range, the listed company needs to adjust the policy in time to ensure the normal economy of the company Development, the normal flow of corporate funds.
P/B ratio is high or low
Whether the price-to-book ratio is high or low needs to be resolved in a timely manner. Whether the price-to-book ratio is high or low, it will have a certain impact on the market company. Therefore, it needs to be controlled within a certain range to measure the development of the enterprise. The calculated value of the price-to-book ratio is for evaluating high-risk companies. The P in the price-to-book ratio PB mainly refers to the price of each stock market, and B refers to the net assets per share, which is the company value. PB, PB>1, which means that the company’s economic development is relatively good, has development potential, and belongs to high-quality stocks. . Because people choose development potential when investing in stocks, they can get higher economic income after investing capital. When facing the high and low price-to-book ratio, corporate managers still think that it is better to have a higher value, which will help the company to obtain more investment funds. For investors, the judgment of price-to-book ratio can only be applied to long-term foreign exchange investments, not suitable for short-term investors. At the same time, it is also necessary to consider various factors such as the comprehensive strength and profit and loss capabilities of the investment company.
The above content is what does PB mean? Whether the price-to-book ratio is high or low is a good introduction, I believe the puzzled person has opened the mystery in their minds after understanding. As long as the value of the price-to-book ratio is maintained within a certain range, there are relatively few occurrences of the phenomenon that the market price is equal to the value.