i What this calculator does
Price to book compares the market price to the accounting value of the company's net assets. It answers a narrow question: what is being paid for each rand of balance-sheet equity.
It is most useful where assets are real and measurable, which is why it dominates analysis of banks, insurers, property companies and miners. For an asset-light business the book value understates what the company is, and the ratio misleads.
This calculator is for educational purposes only. Results are estimates and may vary depending on market conditions, spreads, commissions, platform settings, and exchange rates. It should not be considered financial advice.
How to use the Price-to-Book Ratio Calculator
Every field has a working default, so the calculator produces a result the moment the page loads. Replace the defaults with your own figures and the output updates when you press the button.
- 1. Share Price (R)
- 2. Total Shareholders Equity (R million)
- 3. Intangible Assets (R million) Goodwill and intangibles, for tangible book
- 4. Shares in Issue (million)
- 5. Net Profit (R million) For the implied return on equity
The result panel reports:
- Price to Book Rand paid per rand of equity
- Book Value Per Share Net assets per share
- Price to Tangible Book Excluding intangibles
Alongside the headline figures, the calculator reports market capitalisation, shareholders equity, premium to book, return on equity. Those are the numbers that usually explain why the headline result came out where it did.
The breakdown below the result shows every step of the arithmetic, so you can check the figure rather than trust it. The formula panel names each input as it is used, which is useful if you want to reproduce the calculation in a spreadsheet.
Frequently asked questions
Does a P/B below 1 mean the share is cheap?
It means the market values the company below the accounting value of its net assets. Sometimes that is an opportunity; often it means the market doubts the assets are worth what the balance sheet says, or expects the company to destroy value. Banks trading below book usually reflect the second.
Why exclude intangibles?
Goodwill arises from acquisitions and represents what was paid above the assets acquired. In a liquidation it is worth nothing, so tangible book is the more conservative measure. For companies built through acquisition the two figures can differ enormously.
Which sectors is P/B useful for?
Banks, insurers, property companies and miners, where the balance sheet holds real and measurable assets. It is close to useless for software, services and brands, where the value sits in things accounting does not capture.
How does P/B relate to return on equity?
Closely. A company earning a high return on its equity deserves to trade above book, because each rand of equity produces more than a rand of value. The rough relationship is that P/B should rise with ROE, which is why the calculator shows both.
Is book value the same as net asset value?
In ordinary use, yes for a company: total assets less total liabilities. For a fund or REIT, net asset value has a specific meaning based on the market value of holdings rather than their accounting value.
Where do I find shareholders equity for a JSE company?
On the balance sheet in the annual or interim report, usually labelled total equity or equity attributable to owners of the parent. Use the attributable figure rather than total equity if there are minority interests.
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