Valuation ratios are financial metrics used to assess a company's value relative to its earnings, sales, or assets. Common examples include the Price-to-Earnings (P/E) ratio, which compares a company's share price to its earnings per share, and the Price-to-Book (P/B) ratio, which compares the market value of a company's stock to its book value. These ratios help investors determine if a stock is overvalued or undervalued. Investors use valuation ratios to make informed decisions about buying or selling stocks. A lower P/E ratio may indicate that a stock is undervalued, while a higher P/B ratio could suggest overvaluation. By analyzing these ratios, investors can better understand a company's financial health and market position.