You may have read our guide to How To Analyse A Stock. Or you may have read our Stocks Discussions and see the terms P/B and P/E ratios.

But what are they, and what do they show?

Don’t fret, for we will explain it below.

In this post, we will continue with the second part of the must-know financial ratios to analyse a stock, using Starhub Limited’s financials as an example. If you haven’t read the first part, you can check it out here.

Disclaimer: This post may get pretty technical, but we will try to break it down into digestible pieces!

P/B ratio = Share price/Equity per share

This is what you are paying compared to what the company is worth in their books. The benchmark can be taken to be 1 (what you are paying equals to the actual value of the company now) i.e