Book Value/Price-to-Book Ratio Explained & Why I Don’t Use It (I prefer my companies alive!)

Book value and price-to-book ratio explained: In this video, I talk about the so-called price-to-book ratio (P/B-ratio), discuss if book value is as relevant as it used to be and why a high price-to-book multiple may actually be a positive signal! I will also discuss more nuanced concepts such as the Benjamin Graham Multiplier, price to tangible book value, or price-to-book value per share.

I will first explain what the price-to-book ratio is. In a second step, I will illustrate how to calculate the P/B-ratio by looking at the financial statements of a company. For this purpose, I will take a look at Apple’s most recent annual report. And lastly, I will outline why I think intelligent investors can ignore the price-to-book multiple for the most part and shouldn’t really include the P/B ratio in their analysis. That's because a firm's book value is usually not related to a company's intrinsic value. The intrinsic value of a company is normally higher than its book value.

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Music – PPB: High [NCS Music Without Limitations]

Chapters:
0:00 Intro
1:50 P/B Ratio
3:52 How to calculate P/B
5:39 Tangible Book Value
6:53 P/B Benchmarks
8:09 Book Value vs. Intrinsic Value
10:11 Graham Multiplier
12:10 Buffett 1.0 vs. Buffett 2.0
14:52 Low P/B and Value Traps

DISCLAIMER
The content provided on this channel should be considered an educational resource and should not be construed as individualized investment advice, nor as a recommendation to buy or sell specific securities. The stocks and funds discussed on this channel are examples only and may not be appropriate for your individual circumstances.

Before making any financial or investment decisions, I recommend you consult a financial planner or advisor to take into account your personal investment objectives, financial situation, and individual needs.

In no event shall René Sellmann be liable to any viewer for any damages of any kind arising out of the use of any content published on this channel, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages.

I hope you enjoyed the content!

What do you think about the P/B-ratio as a valuation tool? Do you use it? Why / why not?

[everyreadthis]

This is a great information. As someone relatively new to investing, this is helpful in my investing journey. I look forward to learning more. Thank you for the work you do.

[Neil.Denize]

This is a great explanation mate and fantastic editing.

[drawkingdom]

I can tell this channel is going to blow up. Keep up the awesome work.

[nigell.]

Good video and I subscribed. I had to EQ the audio through my phone it sounded a bit muffled. Other than that I really enjoyed it