Managers and investors will frequently be interested in knowing the value of the firm. The fact that balance sheet assets are listed at cost means that there is no necessary connection between the total assets shown and the value of the firm. Indeed, many of the most valuable assets a firm might have good management, a good reputation, talented employees - dont appear on the balance sheet at all Similarly, the shareholders equity figure on the balance sheet and the true value of the stock need not be related.

A stocks Market-to-Book ratio, often referred to as the Price to Book ratio, compares the market value of the firms investments to their cost.

Market perception of a firms underlying assets exhibit a wide range. Is there a Market-to-Book ratio that is too high or too low? Which company would you feel most comfortable lending to and why?

1. Read the Discussion Guidelines.
2. For the firms identified below, retrieve each Price/Book measure from the Valuation screen in Yahoo! Finance. Examine its current level and historical trend.
   • Clorox Company: CLX (Links to an external site.)
   • CVS Health Corporation: CVS (Links to an external site.)

Note: Yahoos Price/Book measure is third from the bottom, Price/Book (mrq).

The Clorox Company (CLX)
	05/20/2021	3/31/2021	12/31/2020	9/30/2020	6/30/2020	3/31/2020
Price/Book (mrq)	30.24	20.26	22.77	29.17	39.83	39.31

CVS Health Corporation (CVS)
	05/20/2021	3/31/2021	12/31/2020	9/30/2020	6/30/2020	3/31/2020
Price/Book (mrq)	1.65	1.42	1.30	1.12	1.30	1.21