how is the book to market ratio used 
the book to market ratio compares a company s net asset value or book value to its current or market value if the company s market value is trading higher than its book value per share it is considered to be overvalued if the book value is higher than the market value the company is considered to be undervalued for whom is the book to market ratio useful and how investors and analysts use the book to market ratio to differentiate between the true value of a publicly traded company and investor speculation the ratio identifies undervalued or overvalued securities and determines the market value of a company relative to its actual worth the bottom linethe book to market ratio compares a firm s book value with its market value the calculation helps investors find a company s value 