Tangible Book value per share is calculated as:
Tangible Book Value per Share = Total Tangible Equity/ Total Shares Outstanding
= (Total Equity
- Preferred Stock
) / 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.