In short
- P/B: market value ÷ equity.
- EV/EBITDA: enterprise value ÷ EBITDA.
- Yield: dividend ÷ share price.
- No single ratio can say that a share is “expensive”.
One example
Here is a made-up company:
| Data | Value |
|---|---|
| Market value | 1,000 million DH |
| Equity | 500 million DH |
| Net debt | 200 million DH |
| Annual EBITDA | 150 million DH |
| Share price | 100 DH |
| Dividend per share | 4 DH |
The P/B
The price-to-book ratio compares the stock market value with equity. Here: 1,000 ÷ 500 = 2. It is often used for banks and companies with many assets. Its limit: book value may poorly reflect brands, know-how or old assets.
EV/EBITDA
Enterprise value adds net debt to market value: 1,000 + 200 = 1,200 million DH. The ratio is therefore 1,200 ÷ 150 = 8. It helps compare companies with different levels of debt. Its limit: EBITDA does not count necessary investment, interest or tax.
Dividend yield
Here: 4 ÷ 100 = 4%. A high yield can come from a generous dividend, but also from a share price that has fallen. The dividend is not guaranteed for the following year. See our guide to dividends.
How to read them
- Compare like with like: same sector, same period.
- Look at several years: a one-off result can distort a ratio.
- Check the figures used: past results or forecasts.
These ratios help you understand. They give no signal to buy or sell.
Frequently asked questions
What is a “good” P/B?
There is no universal figure. It depends on the sector, profitability and risk.
Why add debt to market value?
Because anyone taking over the company would also have to consider its debts, beyond the value of its shares.
This article is for information and educational purposes only. It is not investment advice or a recommendation to buy or sell any security. Investing in shares involves a risk of capital loss. Check figures against official sources (Casablanca Stock Exchange, AMMC) and consult a licensed professional. Read the full disclaimer.
