What it is
P/B compares the company's market cap to its book value (shareholders' equity on the balance sheet).
A P/B of 1.0 means the market values the company at exactly its accounting book value. P/B above 1 means the market is paying a premium; below 1, a discount.
Where it's useful
P/B is most informative for banks, insurance companies, and asset-heavy businesses where book value is a meaningful number — assets and liabilities are largely cash and securities marked close to fair value.
It's less informative for companies whose value sits in intangibles (brand, software, R&D), since those rarely appear in book value at their true worth.