Price to Tangible Book Value - PTBV

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DEFINITION of 'Price to Tangible Book Value - PTBV'

A valuation ratio expressing the price of a security compared to its hard, or tangible, book value as reported in the company's balance sheet. The tangible book value number is equal to the company's total book value less the value of any intangible assets. Intangible assets can be such items as patents, intellectual property, goodwill etc. The ratio is calculated as:

Price to Tangible Book Value (PTBV)

BREAKING DOWN 'Price to Tangible Book Value - PTBV'

In theory, a stock's tangible book value per share represents the amount of money an investor would receive for each share if a company were to cease operations and liquidate all of its assets at the value recorded on the company's accounting books. As a rule of thumb, stocks that trade at higher price to tangible book value ratios have the potential to leave investors with greater share price losses than those that trade at lower ratios, since the tangible book value per share can reasonably be viewed as about the lowest price a stock could realistically be expected to trade at.

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RELATED FAQS
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    Book value is the price paid for a particular asset. This price never changes so long as you own the asset. On the other ... Read Full Answer >>
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    Dividends paid in cash affect a company's balance sheet by decreasing the company's cash account on the asset side and decreasing ... Read Full Answer >>
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