As withthe earningsmultiples,thereisa largenumber of
firms with very high price-to-book ratios (exceeding 10).
FIGURE8.4PricetoBookValueofEquity—U.S.Stocksin
January 2006
Anotherpointworthmakingaboutprice-to-bookratiosisthat
there are firms with negative book values of equity—the
result of continuously losing money—where price-to-book
ratios cannotbe computed. In this sample of7,123 firms,
there were 1,467 firms where this occurred. In contrast,
though, almost 3,000firms had negative earningsand P/E
ratios could not be computed for them.
Price-to-Sales Ratio