Tangible Book Value
What is Tangible Book Value?
Tangible book value is the accounting value of all a company's assets that can be physically touched and measured, minus all its liabilities. This figure is important to investors because it represents the minimum amount of money they would get if the company were to be liquidated. For example, if a company has $100 million in assets and $50 million in liabilities, its tangible book value would be $50 million. Tangible book value includes assets such as cash, inventory, and equipment. It does not include intangible assets such as goodwill or patents.
Goodwill is an intangible asset that represents the value of a company's reputation and customer base. It is not something that can be physically touched or measured, and therefore cannot be included in the calculation of tangible book value.