A closely related ratio is called P/B Ratio. The difference between Price-to-Tangible-Book Ratio and P/B Ratio is that book value other than intangibles are used in the calculation.
Some businesses have very light assets, such as software companies or insurance agencies. The Price-to-Book Ratio does not work well for these companies. Some companies even have negative equity, so the Price-to-Book Ratio cannot be applied to them.
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More) Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names