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Sunday, July 17, 2011

How to Calculate Book-to-Market Ratio

Book-To-Market Ratio is a financial ratio used to measure the value of a company by comparing the book value of a company to its market value. If the ratio is more than 1 then the stock is considered undervalued; if it is less than 1, the stock is considered overvalued.

Formula:
Book-To-Market Ratio = Book value of a company / Market value of a company

Note: The market value of a company is

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