- Price to Tangible Book Value - PTBV - Investopedia
- Tangible Book Value Per Share (TBVPS) - Investopedia
A company's tangible book value looks at what common shareholders can expect to receive if the firm goes bankrupt and all of its assets are liquidated at their book values, and intangible assets, such as goodwill , are removed from this calculation because they cannot be sold during liquidation. Companies with high tangible book value per share provide shareholders with more insurance in case of bankruptcy.
Price to Tangible Book Value - PTBV - Investopedia
An organization's tangible assets can include any physical products the company produces, as well as any materials used to create them. Should an organization be in the business of producing bicycles, any completed bicycles, any unused bicycle parts and any raw materials (such as metal for fabrication) would qualify as tangible assets. The value of these assets is determined based on what price they would draw should the company need to liquidate, most commonly in the event of a bankruptcy.
Tangible Book Value Per Share (TBVPS) - Investopedia
A tangible book value per share (TBVPS) is a method of valuing a company on a per-share basis by measuring its equity after removing any intangible assets , and the tangible book value per share is calculated as follows:
Book value refers to the ratio of stockholder equity to the number of shares. It is takes into account only the accounting valuation , which may not be an accurate reflection of current market valuation.
The TBVPS provides an estimate of what each share would be valued at should the company go bankrupt and be forced to sell their assets. Since certain intrinsic characteristics, such as good will or employee knowledge, cannot be liquidated for a price, any value in those intangibles are not included in the estimate. The TBVPS applies only to physical items that can be handled and sold.
The tangible book value per share (TBVPS) focuses solely on the value of an organizations tangible assets. Once the value of the tangible assets is determined, that amount is divided by the number of shares currently outstanding.
In theory, a stock's tangible book value per share represents the amount of money an investor would receive for each share if a company were to cease operations and liquidate all of its assets at the value recorded on the company's accounting books. As a rule of thumb , stocks that trade at higher price to tangible book value ratios have the potential to leave investors with greater share price losses than those that trade at lower ratios, since the tangible book value per share can reasonably be viewed as about the lowest price a stock could realistically be expected to trade at.
The price to tangible book value (PTBV) is a valuation ratio expressing the price of a security compared to its hard, or tangible, book value as reported in the company's balance sheet. The tangible book value number is equal to the company's total book value less the value of any intangible assets. Intangible assets can be such items as patents , intellectual property , goodwill etc. The ratio is calculated as: