What is Tangible Book Value per Share (TBVPS)?
Definition of Tangible Book Value per Share (TBVPS)
Tangible Book Value per Share (TBVPS) is the percentage of tangible assets on a company’s balance sheet attributable to each share of common stock. It excludes goodwill and items categorized as intangible assets on the balance sheet.
Tangible book value per share is calculated by the following formula;
TBVPS = (Tangible Book Value – Book Value of Preferred Stock) / Common Shares Outstanding
Explanation of Tangible Book Value per Share (TBVPS)
A company’s tangible book value tells the expectation of common shareholders to receive if the firm goes bankrupt and all of its assets are liquidated at their book values. Intangible assets, such as goodwill, are excluded 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.