Definition
Tangible book value is book value minus intangible assets (goodwill, patents, trademarks). It represents the value of physical assets that could be liquidated. More conservative than book value, it's particularly relevant for banks and companies that have made acquisitions with significant goodwill.
Formula
Example
A bank has $50B book value but $15B in goodwill. Tangible book value is $35B - more relevant for assessing liquidation value.
FAQ
What is Tangible Book Value?
Book value excluding intangible assets like goodwill.
How do you calculate Tangible Book Value?
A common formula for Tangible Book Value is: Tangible Book Value = Book Value - Intangible Assets - Goodwill
Why is Tangible Book Value important?
Tangible Book Value helps investors evaluate fundamental analysis and make more informed decisions.
Related Terms
Book Value
The net asset value of a company based on its balance sheet.
Goodwill
An intangible asset representing the premium paid in acquisitions.
Intangible Assets
Non-physical assets with economic value like patents and brands.
Price-to-Tangible Book Value
A valuation ratio comparing stock price to tangible book value per share.