Use of Price to Book Value Formula
The price to book value formula can be used by investors to show how the market perceives the value of a particular stock to be.
A ratio over one implies that the market is willing to pay more than the equity per share. A ratio under one implies that the market is willing to pay less.
A price to book value of less than one can imply that the company is not running up to par. This, along with other factors, could also lead to a hostile takeover.