Price-to-Book - what the market pays for $1 of accounting net worth. Graham's defensive ratio of choice. See it applied to BRK-B on invest-like to make it concrete.

How is p/b ratio calculated?

The formula is: P/B = Share Price / Book Value per Share Book Value per Share = (Total Equity − Preferred Equity) / Shares Outstanding. The full breakdown is on this page, including a worked example on BRK-B.

Why does p/b ratio matter for value investing?

P/B Ratio is a valuation metric documented across Warren Buffett's 50+ years of Berkshire Hathaway shareholder letters and the broader value-investing canon (Graham, Fisher, Lynch, Greenblatt). It feeds into the Buffett-Fit composite score on invest-like - graders apply it consistently across every public stock so you can compare like-for-like.

Where can I see p/b ratio for a real stock?

Open /buffett/brk-b/ on invest-like for BRK-B's P/B Ratio value alongside the rest of the 5-pillar Buffett-Fit verdict. Every public stock in the 12,000-ticker universe has the same field - refresh daily.

How is p/b ratio different from pe ratio?

P/B Ratio and pe ratio are both valuation metrics - see the linked term for the distinction in mechanics and use. The Buffett-Fit framework on invest-like uses both in the composite score with different pillar weights.

P/B Ratio - Definition, Formula + Buffett Example

Price-to-Book - what the market pays for $1 of accounting net worth. Graham's defensive ratio of choice.

What it is

P/B compares share price to book value per share (total equity ÷ shares outstanding). A P/B of 1 means the market values the company at exactly its accounting net worth.

Graham's rule

Benjamin Graham, Buffett's teacher, looked for P/B < 1.5 as a defensive criterion. A P/B below 1 was his "net-net" zone — buying at less than liquidation value, with built-in margin of safety.

When P/B works (and when it doesn't)

Works well for: banks, insurance companies, utilities, real estate — businesses where the balance sheet captures most of the value.

Misleading for: software, brands, services — businesses where most of the value is intangible. Microsoft's software code, Coca-Cola's brand, Visa's network — these don't show up on the balance sheet, so P/B looks artificially high.

Pitfalls

Goodwill from acquisitions inflates book value without reflecting any real asset
Buybacks shrink book value, making P/B look higher even when nothing changed economically
Recent stock-based compensation and write-downs distort P/B in tech/biotech

P/B Ratio

What it is

Graham's rule

When P/B works (and when it doesn't)

Pitfalls

Related terms

See it on a real stock

Related on invest-like