The MB ratio can be computed easily by dividing the firm’s market value of common equity at a point in time by the book value of common equity from the firm’s most recent balance sheet. For example, on December 31, 2012, PepsiCo’s market value was $105,656 million ($68.43 per share 
1,544 million shares) and PepsiCo’s 2012 book value of common shareholders’ equity was $22,417 million (Appendix A). Thus, PepsiCo was trading at an MB ratio equal to 4.7 ($105,656 million/$22,417 million). The MB ratio measures market value as a multiple of accounting book value at a point in time. The MB ratio reflects what the market value is, but it does not tell us what the ratio should be given our estimate of intrinsic value.
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