Tangible book value per share (TBVPS) is common shareholders' equity minus goodwill and other intangible assets, divided by the number of common shares outstanding. It estimates the net value per share of the assets a company could more readily sell or use to repay creditors, excluding items that have no physical form.
It is a stricter version of book value per share, and it is always equal to or lower than it.
TBVPS is calculated from figures reported in SEC filings. Common equity starts with stockholders' equity attributable to the parent, tagged StockholdersEquity in XBRL, less any preferred stock. Goodwill is tagged Goodwill and identifiable intangibles such as patents, trademarks, and customer relationships are commonly tagged IntangibleAssetsNetExcludingGoodwill. Regulation S-X Rule 5-02.15 (Intangible assets) requires significant classes of intangibles to be shown separately, which is what makes the subtraction possible. The share count is common shares outstanding at the balance-sheet date.
Goodwill arises only from acquisitions and cannot be sold on its own, and many acquired intangibles have uncertain value in a liquidation. Removing them gives a more conservative floor. Some calculations also subtract related deferred tax liabilities, or leave in mortgage servicing rights for banks, so figures from different sources can differ. Serial acquirers often have large or negative tangible book value because much of their equity rests on goodwill.
The measure is central to bank analysis, where the price-to-tangible-book ratio is a standard valuation tool and tangible common equity is a key measure of loss-absorbing capital. For asset-light technology or consumer brands, TBVPS says little about value, because their most important assets were built internally and never recorded.
A: Goodwill is the premium paid for past acquisitions above the fair value of identifiable net assets. It cannot be sold separately and offers creditors little in a liquidation, so analysts remove it for a conservative view.
A: Yes. If goodwill and intangibles exceed common equity, TBVPS is negative. That is common among companies that have grown mainly through acquisitions or have bought back a lot of stock.
A: A bank's assets are mostly financial and carried near market value, so tangible equity is a reasonable measure of the capital available to absorb losses. The price-to-tangible-book ratio is a standard way to value banks.
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