Tangible Book Value Per Share Calculator (Step 3)
This calculator finds the **Tangible Book Value Per Share** by deducting both Preferred Stock value and Intangible Assets from Total Shareholder's Equity before dividing by the number of common shares.
Tangible Book Value provides a more conservative view of a company's per-share value, excluding assets like goodwill and patents that may have uncertain value in a liquidation scenario.
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Understanding Tangible Book Value
What are Intangible Assets?
Intangible assets are non-physical assets that have value because of the rights they provide to the owner. Common examples include goodwill (the value of a company's reputation and customer base, typically recorded when one company acquires another), patents, trademarks, copyrights, and licenses.
Why Deduct Intangible Assets?
While valuable to a going concern business, intangible assets often have little to no realizable value in a forced liquidation. Patents or trademarks might be difficult or impossible to sell separately from the core business, and goodwill disappears if the business is dismantled. Deducting them provides a more conservative, "hard asset" valuation.
Tangible Book Value Per Share Formula
The formula used in this calculator is:
(Total Shareholder's Equity - Value of Preferred Stock - Value of Intangible Assets) / Total Outstanding Common Shares
The numerator represents the equity attributable to common shareholders from the company's tangible assets.
Difference from Regular Book Value
Regular Book Value Per Share (from Step 2) uses all of Shareholder's Equity attributable to common stock, including intangible assets. Tangible Book Value Per Share specifically removes the value of intangible assets from the numerator.
Tangible BVPS Examples
Here are some examples demonstrating the calculation:
Example 1: Standard Calculation with Intangibles
Inputs:
- Total Equity: $1,500,000
- Preferred Stock: $200,000
- Intangible Assets: $300,000
- Common Shares: 800,000
Calculation:
Tangible Equity = $1,500,000 - $200,000 - $300,000 = $1,000,000
TBVPS = $1,000,000 / 800,000
Result: **$1.25**
Example 2: No Intangible Assets
Inputs:
- Total Equity: $1,500,000
- Preferred Stock: $200,000
- Intangible Assets: $0
- Common Shares: 800,000
Calculation:
Tangible Equity = $1,500,000 - $200,000 - $0 = $1,300,000
TBVPS = $1,300,000 / 800,000
Result: **$1.63** (Note: Higher than Ex. 1 as intangibles aren't subtracted)
Example 3: No Preferred Stock
Inputs:
- Total Equity: $1,500,000
- Preferred Stock: $0
- Intangible Assets: $300,000
- Common Shares: 800,000
Calculation:
Tangible Equity = $1,500,000 - $0 - $300,000 = $1,200,000
TBVPS = $1,200,000 / 800,000
Result: **$1.50**
Example 4: Negative Tangible Book Value
Scenario: Company has significant intangible assets and some preferred stock.
Inputs:
- Total Equity: $1,000,000
- Preferred Stock: $300,000
- Intangible Assets: $800,000
- Common Shares: 500,000
Calculation:
Tangible Equity = $1,000,000 - $300,000 - $800,000 = -$100,000
TBVPS = -$100,000 / 500,000
Result: **-$0.20** (Indicates liabilities + preferred + intangibles exceed assets)
Example 5: High Common Shares
Inputs:
- Total Equity: $5,000,000
- Preferred Stock: $500,000
- Intangible Assets: $1,000,000
- Common Shares: 10,000,000
Calculation:
Tangible Equity = $5,000,000 - $500,000 - $1,000,000 = $3,500,000
TBVPS = $3,500,000 / 10,000,000
Result: **$0.35**
Example 6: Small Company
Inputs:
- Total Equity: $100,000
- Preferred Stock: $10,000
- Intangible Assets: $20,000
- Common Shares: 50,000
Calculation:
Tangible Equity = $100,000 - $10,000 - $20,000 = $70,000
TBVPS = $70,000 / 50,000
Result: **$1.40**
Example 7: Preferred Stock > Total Equity
Scenario: Significant preferred stock, negative equity for common even before intangibles.
Inputs:
- Total Equity: $500,000
- Preferred Stock: $600,000
- Intangible Assets: $100,000
- Common Shares: 100,000
Calculation:
Tangible Equity = $500,000 - $600,000 - $100,000 = -$200,000
TBVPS = -$200,000 / 100,000
Result: **-$2.00**
Example 8: Significant Intangibles Relative to Equity
Scenario: Company acquired others, resulting in high goodwill.
Inputs:
- Total Equity: $2,000,000
- Preferred Stock: $0
- Intangible Assets: $1,800,000
- Common Shares: 1,000,000
Calculation:
Tangible Equity = $2,000,000 - $0 - $1,800,000 = $200,000
TBVPS = $200,000 / 1,000,000
Result: **$0.20** (Book Value before intangibles would be $2.00)
Example 9: Negative Total Equity
Scenario: Company has accumulated losses.
Inputs:
- Total Equity: -$100,000
- Preferred Stock: $50,000
- Intangible Assets: $50,000
- Common Shares: 200,000
Calculation:
Tangible Equity = -$100,000 - $50,000 - $50,000 = -$200,000
TBVPS = -$200,000 / 200,000
Result: **-$1.00**
Example 10: Zero Tangible Book Value
Scenario: Tangible equity is exactly zero.
Inputs:
- Total Equity: $1,000,000
- Preferred Stock: $300,000
- Intangible Assets: $700,000
- Common Shares: 1,000,000
Calculation:
Tangible Equity = $1,000,000 - $300,000 - $700,000 = $0
TBVPS = $0 / 1,000,000
Result: **$0.00**
Frequently Asked Questions about Tangible Book Value Per Share
1. What is Tangible Book Value Per Share (TBVPS)?
It's a financial metric that calculates the value of a company's physical and financial assets, minus its liabilities, minus the value of preferred stock, and further minus the value of its intangible assets, all on a per-common-share basis. It represents a conservative estimate of value in a liquidation scenario.
2. How does TBVPS differ from regular Book Value Per Share?
Regular Book Value Per Share includes all of Shareholder's Equity attributable to common stock, including intangible assets. TBVPS specifically excludes the value of intangible assets, providing a more conservative metric.
3. Why are Intangible Assets excluded?
Intangible assets like goodwill, patents, and trademarks are excluded because their actual market value is often uncertain or difficult to realize in a liquidation event, especially if they cannot be sold independently of the core business. Excluding them provides a focus on the company's 'hard' assets.
4. What are common examples of Intangible Assets subtracted?
The most common is Goodwill, which arises from acquisitions. Others include patents, trademarks, copyrights, licenses, and customer lists, if they are listed as assets on the balance sheet.
5. Where do I find the value of Intangible Assets?
Total Intangible Assets are listed on the company's balance sheet, typically under the Assets section, often separate from property, plant, and equipment (tangible assets). Goodwill is usually listed separately as well.
6. Can Tangible Book Value Per Share be negative?
Yes, it can be negative. This happens when the combined value of a company's liabilities, preferred stock, and intangible assets exceeds the value of its total assets. It suggests that in a hypothetical liquidation, common shareholders would likely receive nothing and potentially owe money if liabilities exceeded asset value significantly (though this is complex in reality).
7. Is a high TBVPS good?
A high TBVPS relative to the market price of the stock can sometimes indicate an undervalued company based on its tangible assets. However, it's only one metric. Growth companies often have low or negative TBVPS because their value is tied to future earnings potential and intangible assets (like brand or technology) rather than historical tangible asset values.
8. Does TBVPS predict future stock price movements?
TBVPS is a historical accounting measure, not a predictor of future stock prices. Stock prices are driven by future earnings expectations, market sentiment, and many other factors unrelated to historical tangible asset values.
9. How does this relate to "book value" used by banks?
Banks, particularly in lending decisions, often focus on tangible net worth or tangible common equity, which are very similar concepts to the numerator used in TBVPS. They prioritize tangible assets as collateral or a measure of financial stability.
10. Should I use TBVPS or regular BVPS?
Both metrics provide different perspectives. Regular BVPS shows total equity attributable to common shareholders. TBVPS shows a more conservative measure focusing only on tangible assets. TBVPS is often preferred for value investing strategies focusing on liquidation value or for comparing companies in asset-heavy industries. For companies with significant value in intellectual property (like tech or pharma), regular BVPS or other valuation methods might be more relevant.
