Book to Market Ratio

Book to Market Ratio - The book to market ratio is a specific stocks value on the book divided by that specific stock's value on the market. The book value of a specific stock is calculated using the company's balance sheet, and the market value of any stock is the value based on the price of the specific stock. If the ratio of the stock is above one, then that stock is considered to be potentially an undervalued stock, but if the ratio of the stock is below one that stock is considered to be potentially an overvalued stock. Technology stocks tend to have a low book to market ratio.