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6.11 Lessons Learnt

  • The price to book ratio is important as it can help investors understand whether the market price of a company seems reasonable to its balance sheet.
  • Please note that high growth companies will often show price to book ratio well above 1.0 whereas companies facing problems will occasionally show ratios below 1.0
  • It is important to look at the price to book ratio as it can help you as an investor understand whether the market price of a company is reasonable compared to it’s balance sheet.