Another thing to be wary of is what the PB ratio actually tells us. A low PB value tells us that either the market believes the asset value is overstated – that is, the ‘true’ value of the company’s assets are not worth as much as the balance sheet says they are – or that the company is not employing its assets in an optimum manner. If the first is true, if the quality of the assets is in question, then the investor may be better advised to stay clear of the
