Tangible Book Value Per Share (TBVPS): Definition and Formula

Tangible Book Value Per Share (TBVPS): Definition and Formula

Tangible book value per share (TBVPS) measures the per-share value of a company’s net tangible assets — that is, shareholders’ equity excluding preferred stock and intangible assets. It estimates what common shareholders might receive per share if the company were liquidated and only tangible assets were realizable.

Key takeaways

• TBVPS = (Total Equity − Preferred Stock − Intangibles) / Total Shares Outstanding.
• It focuses on physical, sellable assets (buildings, inventory, machinery, land, equipment).
• Intangible items such as goodwill, patents, and trademarks are excluded.
• TBVPS is useful for downside protection analysis but can be distorted by accounting methods and outdated book values.

Formula

TBVPS = (Total Equity − Preferred Stock − Intangibles) / Total Shares Outstanding

Where:
* Total Equity: common shareholders’ equity from the balance sheet.
Preferred Stock: subtracted because preferred shareholders have a prior claim on assets.
Intangibles: goodwill, patents, trademarks, and other non-physical assets excluded from TBV.
* Total Shares Outstanding: number of common shares currently held by shareholders.

How to calculate (step-by-step)

1. Start with total shareholders’ equity from the balance sheet.
2. Subtract any preferred equity.
3. Subtract intangible asset balances (goodwill, patents, trademarks, etc.).
4. Divide the result by the number of common shares outstanding.

Example: If total equity = $500 million, preferred stock = $50 million, intangibles = $120 million, and shares outstanding = 100 million, then TBVPS = (500 − 50 − 120) / 100 = $3.30 per share.

Interpretation and uses

• TBVPS provides a conservative estimate of per-share liquidation value because it considers only tangible assets.
• Investors use TBVPS to assess downside risk, compare with market price (price-to-tangible-book), and identify potentially undervalued companies, especially in asset-heavy industries.
• A market price below TBVPS may signal that the market expects asset write-downs or poor future earnings prospects; conversely, a price above TBVPS often reflects intangible asset value or strong earnings potential.

Limitations and criticisms

• Book values are accounting measures and may not reflect current market values of assets (especially long-held real estate or obsolete equipment).
• Some tangible assets are difficult to liquidate quickly or at book value (specialized machinery, inventory in niche markets).
• Excluding intangibles can understate value for firms whose primary assets are intellectual property, brands, or human capital.
• Accounting policies and estimates (depreciation, impairment) can materially affect TBVPS comparability across companies.

Where to find TBVPS data

• Calculate from items on the company’s balance sheet (total equity, preferred stock, intangible assets, shares outstanding).
• Financial databases and stock-screening tools often provide TBVPS and historical trends for comparison.

Bottom line

TBVPS is a conservative, asset-based per-share metric useful for assessing liquidation value and downside protection. Use it alongside other valuation measures and qualitative analysis to form a fuller view of a company’s financial health and prospects.