Definition of Tangible Common Equity (TCE)
Tangible common equity is a representation of the value of a company going through liquidation, by subtracting assets that would not be worth anything during the liquidation process. TCE is calculated by deducting intangible assets, goodwill, and preferred equity costs from the company’s normal book value.
Explanation of Tangible Common Equity (TCE)
Tangible common equity is used to measure a company’s capital, which is used to evaluate its ability to deal with potential losses. It looks at how much common equity is supporting a company and ignores intangible assets such as goodwill. In bad times, intangible assets are less likely to have value.