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The Market to Book Ratio is a financial metric that compares a company's market value to its book value. The formula for this ratio is derived from the concepts of market price and book value per share.

In this ratio, the market price per share reflects what investors are willing to pay for a company's stock in the market. Conversely, the book value per share represents the company's net asset value as recorded on its balance sheet. By dividing the market price per share by the book value per share, the Market to Book Ratio provides insight into how the market perceives the company's value relative to its actual worth based on accounting principles.

A higher ratio may indicate that the market expects strong future growth from the company, while a lower ratio might suggest that the market does not believe the company's assets are being utilized effectively. This ratio is significant for investors when assessing the potential value of a company's stock in relation to its fundamental financial health.