Definition
Tangible Book value per share is calculated as:
Tangible Book Value per Share = Total Tangible Equity/ Total Shares Outstanding
= (
Total Equity -
Preferred Stock -
Intangibles) /
Total Shares Outstanding.
Theoretically it is what the shareholders will receive if the company is liquidated. Total equity is a balance sheet item and equal to total assets less total liabilities of the company. Since intangibles such as goodwill cannot be sold when the company liquidates, tangible book value per share is considered more accurate in reflecting how much shareholders will receive when the company liquidates.
Explanation
Usually a companys book value and tangible book may not reflect its true value. The assets may be carried on the balance sheets at the original cost minus depreciation. This may underestimate the true economic values of the assets. It also may over-estimate their true economic value because the assets can become obsolete.
For financial companies such as banks and insurance companies, their assets may be reported in current market value of the assets owned. Book values of financial companies are more accurate indicator of the economic value of the company.
Related Terms
Total Equity,
Preferred Stock,
Intangibles),
Total Shares Outstanding* All numbers are in millions except for per share dataAres Commercial Real Estate Corp Annual Data
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Ares Commercial Real Estate Corp Quarterly Data
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European Shorting
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