A company’s “book value” (common equity) is the accounting value of the firm (i.e., net assets). This is theoretically the amount that common shareholders would receive if all the assets were sold for their book values and the company’s debts were paid. Some intangible assets, however, would have no value if the firm were to be liquidated (e.g., goodwill). For this reason, some investors prefer to use the tangible book value per share instead of book value per share. The tangible book value per share focuses on hard assets and excludes intangibles like goodwill. A company’s tangible book value is equal to its common equity minus its intangible assets. The tangible book value is then divided by the number of common shares outstanding to obtain the tangible book value per share. — Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. …
