The P/E is the market's view of a company, and return on equity (ROE) is the shareholder's vindication; thus, the price-to-book ratio (P/B) is important because it draws together external and internal factors influencing price. This article examines relationships among profitability (earnings to book value, E/B), the P/E, and so on, to draw conclusions about the price paid for book value. First discussed are two perverse characteristics of P/E—the "counter movement" (the tendency of P/Es to move in the opposite direction of earnings) and the "U" characteristic (a relationship of price to basic earning power). The U characteristic helps explain the anomaly that high P/Es are often associated with very unprofitable companies as well as very profitable ones. Data studied for 30 DJIA stocks for 1949-1962 indicate that ROE is a direct influence on P/E, is a major cause of growth, and is consistently related to earnings stability; expectations of profitability even control payout. Because of the counter movement and the U characteristic, no neat linear relationship exists between P/E and E/B. Because the basic earning power of a company can be expressed in terms of ROE, analysts (instead of using P/E to value some companies and using equity assets to value others) can use a unified system based on P/B multiples. An asset approach does not prevent discounting future values, has the advantage of forcing a study of growth requirements, and takes into account the counter movement and U characteristic.