The P/B Ratio is widely used by investors to determine a stock’s valuation relative to its book value. A high P/B Ratio may suggest that a company is overvalued, whereas a low ratio could indicate an undervalued stock. This metric is especially useful in evaluating financial and asset-heavy companies. It provides insight into how much investors are willing to pay for each dollar of a company's net assets. P/B Ratio also helps compare companies in the same industry and assess their relative financial stability.