Definition
This ratio excludes intangible assets like goodwill and patents from book value, providing a more conservative valuation measure. It's particularly relevant for banks and industrial companies where tangible assets are the primary source of value.
Formula
Example
If book value is $30 per share with $10 in intangibles, tangible book is $20. At a $25 stock price, P/TBV is 1.25x versus P/B of 0.83x.
FAQ
What is Price-to-Tangible Book Value?
A valuation ratio comparing stock price to tangible book value per share.
How do you calculate Price-to-Tangible Book Value?
A common formula for Price-to-Tangible Book Value is: P/TBV = Stock Price / (Book Value - Intangible Assets) Per Share
Why is Price-to-Tangible Book Value important?
Price-to-Tangible Book Value helps investors evaluate valuation and make more informed decisions.
Related Terms
P/B Ratio (Price-to-Book)
A valuation ratio comparing stock price to book value per share.
Tangible Assets
Physical assets with material form like property and equipment.
Book Value
The net asset value of a company based on its balance sheet.
Goodwill
An intangible asset representing the premium paid in acquisitions.