Price to Tangible Book Value

Price to Tangible Book Value

The Price to Tangible Book Value is a ratio of a company’s current share price to its tangible book value per share. An underlying assumption is that if the company were liquidated, it would be unlikely to be able to recognise any value from its intangibles/goodwill, so referencing the share price against tangible book value is a more realistic calculation basis as that would likely be the value shareholders would receive. The ratio can be calculated by taking the share price and dividing it by tangible book value per share. The latter can be derived by dividing the number of shares outstanding by [shareholders’ equity less preferred stock and intangible assets].

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