Tangible book value (TBV) is a company's shareholders' equity minus its goodwill and other intangible assets. Book value is what is left of the assets after all the debts are subtracted. Tangible book value goes one step further and removes the assets you cannot touch or easily sell on their own, such as goodwill (the extra price paid when buying another company), brands, patents and software. What remains is the net worth backed by physical and financial assets such as cash, loans, buildings and equipment. Divide it by the number of shares outstanding and you get tangible book value per share.
Worked example
Company A reports shareholders' equity of $500,000. On its balance sheet, $120,000 is goodwill from an earlier acquisition and $80,000 is other intangible assets (software and patents). Tangible book value = $500,000 - $120,000 - $80,000 = $300,000. With 100,000 shares outstanding, tangible book value per share = $300,000 ÷ 100,000 = $3.00, compared with a regular book value per share (nothing deducted) of $500,000 ÷ 100,000 = $5.00. If the shares trade at $4.50, the price-to-tangible-book ratio is $4.50 ÷ $3.00 = 1.5. The gap between $5.00 and $3.00 is the part of the book value that depends on intangibles holding their worth.
Why it matters
Goodwill and other intangibles are real, but they are hard to sell on their own and can be written down quickly if an acquisition disappoints. Tangible book value shows what the equity looks like without them, so it is a more cautious reading of a company's net worth. Analysts often use it for banks, whose assets are mostly loans and securities, and whose past takeovers can leave a lot of goodwill on the balance sheet; the price-to-tangible-book ratio is then a common yardstick. It is a poor fit for companies whose value lies in brands, software or patents, such as a technology business, where it can look tiny or even negative without saying anything is wrong. A gap between book value and tangible book value is a question to look into, not a verdict, so compare it with similar companies and with the same company's earlier years.
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Frequently asked questions
Take shareholders' equity from the balance sheet and subtract goodwill and the other intangible assets. For the per-share figure, divide the result by the number of shares outstanding. Use the same reporting date for every number.
It means goodwill and intangibles are larger than the whole equity, so removing them leaves less than zero. It can happen after large acquisitions or in businesses built on brands and software. It is a question to look into, such as how the company is financed, not an automatic sign of trouble.
A bank's assets are mostly loans and securities, so its book value is already close to something measurable, and past takeovers can add a lot of goodwill. Removing the goodwill gives a plainer base to compare banks with each other.
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Built & maintained by Worthmap · Last updated November 1, 2026
Educational use only. This tool provides estimates for informational purposes and does not constitute financial, investment, tax, or legal advice. Results are based on inputs you provide and mathematical models, they do not guarantee future performance. Always consult a qualified financial adviser before making investment decisions.