With stock investing, one of the valuation ratios used is the price to book ratio. It identifies the spread between book value and market value for a share of stock. As the spread increases the ratio increases. A good example is Coca-Cola. Its price to book ratio hovers in the 11 range. Coca-Cola is a Dow Jones Industrial top 30 stock.
Price to Book
The price to book ratio is one of the business valuation ratios used to evaluate small cap to DOW Industrial Average stocks. It reflects the market capitalization of a company against the total number of outstanding shares. Common ratios equal anywhere from 1:1 to upwards of 4:1. Higher ratios reflect a tremendous amount of trust and favor by investors due to the company’s long-term stability.