What Does Price to Tangible Book Value (PTBV) Mean?
A valuation ratio that expresses the price of a security compared with 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 minus the value of any intangible assets. Intangible assets are usually assets such as patents, intellectual property, and goodwill The ratio is calculated as shown here:
Investopedia explains 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 the company went out of business and liquidated all of its assets at book value. 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 compared with those which trade at lower ratios, since the tangible book value per share can be viewed as about the lowest price a stock realistically could be expected to trade at.
Related Terms:
• Book Value
• Intangible Asset
• Net Tangible Assets
• Price-to-Book Ratio—P/B Ratio
• Tangible Asset
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