Valuation ratios are financial measures used to evaluate the worth or value of a company's stock or assets. They help investors understand if a stock is overpriced or undervalued by comparing certain ratios, such as price-to-earnings (P/E) ratio or price-to-book (P/B) ratio, to industry benchmarks or historical data. Essentially, these ratios give a quick snapshot of how the market is valuing a company's stock.
Full definition