Bitcoin. La bolla dei bitcoin ed il sonno dei regulatorsBitcoin da 10 a 11mila dollari in poche ore. Poi cala a 9500. bolla Latest breaking news, including politics, crime and celebrity. Find stories, updates and expert opinion. Powerful report reviewer with printing tools All reports available in AlAmeen Accounting System are characterized by clarity and simplicity in results displayed. How to Use the Price Book Ratio The Motley Fool. This article was originally written in 2. The price to book PB ratio is widely associated with value investing, and in fact we use it as one of the metrics on our Motley Fool Inside Value scorecard. Like the price to earnings PE ratio, a low PB ratio isnt always indicative of an undervalued company. Conversely, companies with a relatively high PB ratio are not necessarily overvalued. Simply Accounting Premium 2005 Serial PodcastPB is a useful measure for comparing firms that have negative earning those businesses cant be compared using the PE ratio. Quite simply, far fewer firms have negative book values. The PB ratio is calculated as follows PB ratio market capitalization book value of equityMarket capitalization is often abbreviated as market cap book value is often abbreviated as BVMarket capitalization shares outstanding market price per share. Book value of equity book value of assets book value of liabilities. So therefore, PB market cap BV of assets BV of liabilitiesThe book values of assets and liabilities are easily found on the balance sheet. Simply Accounting Premium 2005 Serial Port' title='Simply Accounting Premium 2005 Serial Port' />The book value of assets is usually classified as total assets. You may need to do some arithmetic to arrive at the book value of liabilities it may not be quite so obvious on some balance sheets, but it includes all current liabilities and long term obligations. The book value of equity is often broken out for us under the heading Shareholders or Shareowners Equity. In my experience, most financial websites are fairly accurate with PB ratios. What we can deduce from a low PBIn absolute terms, a PB ratio under 1. Ill explain later. Generally speaking, a low PB can indicate That assets are overstated on the balance sheet. In this case, we should avoid the company because it may be destroying shareholder value. Ford NYSE F is a good example of this. According to MSN Money Central, Fords PB was 0. Today, Fords PB is 1. During that time, the share price has fallen from nearly 5. Clearly, Ford had other problems, but the low PB certainly did not indicate value. At Inside Value, we generally look for companies that have been increasing book value per share over a number of years because as Fords plight shows the share price often follows the book value per share. That the company will generally have a poor return on equity ROE and poor return on assets ROA. If earnings are negative, there will be a negative ROE and ROA. Of course, if there is a solid management team that is turning around the companys fortunes, then we may have an interesting value proposition. When I first recommended MCI for Inside Value subscribers, it certainly fit that mold. That the industry at large has a low PB. Certain industries have low PB ratios, generally because they are cyclical or because the companies generate relatively low ROE. Hurricane Katrina reminds us that insurance companies typically have low PB ratios because of the cyclicality of that industry. Road To Serfdom Ebook. Hard insurance markets i. This attracts new capital in the short term, when investment returns can be very good. After a while, however, competition increases and the market softens. Its important to find insurance companies that maintain discipline in a soft market. Otherwise, theyll take on risks that are not adequately covered in the premiums. Eventually, claims will roll in, along with underwriting losses, and the book value will be reduced. PB has a buddy. ROE is a useful companion metric for PB. This is no surprise after all, the B in PB and the E in ROE are one and the same theyre both symbols for book value of equity. A high ROE normally accompanies a high PB ratio because investors naturally bid up the price of a company that gives them a better return on their equity. Similarly, companies that have high earnings growth rates generally have high PB ratios investors expect the book value of equity per share to grow. However, if a high growth company has a high PB ratio and low ROE, that growth may not be translating into shareholder value. This could portend a collapse in share price. Even if growth rates are average, a company with a high ROE will generally have a high PB ratio. Consequently, I always screen for ROE and PB. Simply Accounting Premium 2005 Seriali' title='Simply Accounting Premium 2005 Seriali' />The difference between the companys ROE and its cost of capital is important. The wider the spread, the higher the PB ratio the higher it should be, at least. Even when comparing PB within an industry, there may be discrepancies that have nothing to do with valuation. Best use of PBPB is best used for asset heavy companies, such as financial institutions, manufacturing companies, and other capital intensive industries. Companies with a regular inflow of new assets, such as capital expenditures in the case of Daimler. Chrysler NYSE DCX or more cash in the case of JPMorgan. ChaseNYSE JPM, are likely to have book values that at least relate to market values e. PBs of Daimler Chrysler and JPMorgan. In both cases, a lower than average PB ratio compared with past years may indicate a value opportunity. Film Chronicles Of The Ghostly Tribe there. Comparing it to the S P 5. PB of 2. 8. 4 according to Barra is meaningless as a measure of value. PB distortions. Distortions in PB and ROE, for that matter arise because book value of equity is more an accounting measure than an economic measure. Here are a few natural distortions to watch out for Companies that have very long lived assets like real estate still on the balance sheet at original cost i. All other things equal, the effect will be an increase in the PB ratio, as the reported B is lower than the real value of the equity. In this case, you might miss an undervalued company by simply looking for low PB ratios. Service companies, and those that rely on intellectual property IP, are not capital intensive, and they do not have significant assets recorded on the balance sheet. A good example is Microsoft NASDAQ MSFT. At the end of its 2. Microsoft had 9. Nearly all Microsofts IP was developed in house and is not capitalized on the balance sheet and it cant be, because IP must be expensed on the income statement under U. S. generally accepted accounting principle rules. Recent acquisitions will generally increase the book value and lower the PB because the new assets go on the balance sheet at the full price paid. In the unlikely event that Microsoft acquired Oracle NASDAQ ORCL and all of its IP for 7. Error 1603 Adobe Acrobat Update For Mac. The amount in excess of Oracles 1. A serial acquirer of other companies will almost always have a high book value, which may artificially lower PB. However, a huge part of the book value will be in goodwill or intangibles. In this case it is prudent to subtract goodwill from book value, resulting in a tangible book value. We can then calculate the more meaningful price to tangible BV ratio. Recent write offs will reduce the book value of equity. Companies typically say that this is a non cash charge, yet in a real sense it reduces the value of shareholder equity. It may not show up in the PB ratio because as companies reduce the B via write offs, investors reduce the P via a lower stock price. A company that has a history of buying back a large number of shares in excess of covering dilution from employee stock options will have a lower book value. All of the shares bought back go into what is called treasury stock at the full buyback price, and these are subtracted from book value.