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What are the limitations of the P/B ratio?

P/B ratios are helpful in finding the true value of the firm’s equity in the context of the market price of the stock. But, any kind of variations in the adoption of the accounting standards can generate an invalid P/B ratio. This mostly happens in the case of companies from different countries. The P/B ratio can be worthless in the case of new-age companies that are burning cash to acquire customers, which will show negative earnings leading to a negative P/B ratio.

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What is the Price-to-Earnings (P/E) ratio? What is Earnings Per Share (EPS)?

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Nifty 50

16,641.8 157.95(0.96%)

BSE Sensex

16,641.8 157.95(0.96%)

Nifty Bank

16,641.8 157.95(0.96%)

View Market

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