How Do You Calculate Book-To-Market Ratio In The Stock Market?
Getting down to the core of the financial health of a company is imperative when all the information can overwhelm an investor. One important component is the calculation of Book-to-Market Ratio of a corporation. Ascertain the Book value of a company. Book value is the price of an asset minus any depreciation that is declared. The book value of a company is total assets minus intangible assets and liabilities. Intangible assets are items such as patents and goodwill. Book value is essentially, “How much is the company worth if they went out of business today and had to sell everything?” Determine the market value of a company. The market value is the total value of the shares outstanding in a public corporation. The share value is the current market price of the shares outstanding. To calculate this figure take the total number of shares outstanding and multiply that number by the current market value of the company’s stock. Divide the Book value by the market value. After establishing
