V5. The Price to Book (P/Book) Ratio

In this fourth video on valuation, the P/Book ratio is discussed. Like all of the valuation methods, it has advantages and limitations - and perhaps more importantly, times when it might be relevant and times when less so - more for companies that have tangible book values that can be determined and where the assets are more tangible and relevant to the companies productive capacity ultimately, less so for companies where the book value does not capture value such as goodwill or a brand that might also not be reflected in the balance sheet.

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[Glass232499]

so how do you know what book value is?

[savingandinvesting]

From a an analysis of the balance sheet where one would look at the Total Assets and subtract intangible assets such as goodwill to arrive at the company's Book Value.

[icharisghost]

@Glass232499 the balance sheet etc are all in the annual report that you can get by contacting a company''s investor relations

[icharisghost]

you look at the annual report

[capitalismforever]

@savingandinvesting You just described "tangible book value", not "book value". The two are different.

[o0xst]

Thanks!

[TJYE]

Amazing vids Michael!

One question though: Most forms of investments I'm know eg) mutal funds, bonds, etc have around the same rate of returns as the rate of inflation. Are real estate and stocks the only ways to really beat inflation and make a profit?

Thanks again.

[qualqui]

Thanx Mike for yet another interestin' vid! 5 stars man, keep up the good work!

[dakshinamurti]

Excelent stuff, Michael!

[TENNISCHAMP98]

Thanks alot. Detailed yet concise... awesome..