Tangible Assets

Category

Balance Sheet

Units

Currency

Formula

Total Assets − Goodwill − Other Intangible Assets

US-GAAP elements

AssetsIntangibleAssetsNetIncludingGoodwill

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Tangible assets are a company's total assets minus goodwill and other intangible assets. The figure keeps physical assets, such as property, equipment, and inventory, along with financial assets such as cash, investments, and receivables, and removes non-physical assets such as acquired brands, customer relationships, patents, and goodwill.

Tangible assets is a derived measure, not a line item companies report. It is calculated from figures reported in SEC filings.

The inputs come from the balance sheet. Total assets is tagged Assets in XBRL. Intangibles are reported under Regulation S-X Rule 5-02.15, which requires each class of intangible asset larger than 5 percent of total assets to be shown separately, and many companies tag the combined balance as IntangibleAssetsNetIncludingGoodwill, or report Goodwill and IntangibleAssetsNetExcludingGoodwill separately. Subtracting those amounts from total assets gives tangible assets.

The word "tangible" is used loosely here. Cash, receivables, and securities are not physical, but analysts count them because they have a measurable value independent of the company's acquisition history. Definitions differ at the edges: some also remove deferred tax assets or capitalized software, and banks typically exclude mortgage servicing rights from the subtraction. Because intangibles created internally, such as a company's own brand or research, are generally expensed rather than recorded, a company that has grown through acquisitions will show a much larger gap between total and tangible assets than one that has grown organically.

Tangible assets appear most often as the denominator of the tangible common equity ratio, a capital measure widely used for banks, and in credit analysis, where lenders focus on assets that would retain value in a liquidation. Comparing tangible assets with total assets also shows how much of a balance sheet depends on the carrying value of acquisitions.