Free · Equity ratios and valuation

Price to Book & Tangible Book from Common Equity

Calculate ordinary and tangible book value per share after preferred equity, and compare each with a share price.

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Calculator inputs

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How to use this calculator

  1. Enter the known values in the units shown. Results update as you type.
  2. Where results are editable, change one to solve backwards. Lock a value to hold it fixed.
  3. Use the worked example to check the method. Reset restores the starting fields.

Use the result with context

Results are estimates for planning and education. Confirm rates, taxes, fees, and legal requirements with the relevant institution or a qualified professional before making a financial decision.

Formula and method

With total equity 1,200, preferred equity 200 and 100 common shares, book value is 10 per share. At price 12, P/B is 1.2. Removing 200 of intangibles gives tangible book 8 and P/TB 1.5.

Common book value/share = (equity − preferred equity) / common shares; tangible book also subtracts intangibles; price/book = price / book value per share

Worked example

Enter these known values and leave the other values blank.

Total stockholders’ equity
1200 USD
Preferred equity to deduct
200 USD
Common shares outstanding
100
Common share price
12 USD
Intangible assets to deduct
200 USD
Common book value per share
10 USD
Price / common book value
1.2
Tangible common book value per share
8 USD
Price / tangible book value
1.5

Assumptions and limitations

  • Shares must be positive. Preferred equity, intangibles and share price are nonnegative; total equity may be negative.
  • A zero ordinary or tangible book-value denominator makes that ratio undefined. Negative book values can produce signed multiples that are not conventional valuation comparisons.
  • This model deducts the entered intangibles without adding deferred-tax or other regulatory adjustments. Different accounting frameworks and company disclosures can use different tangible-book definitions.
  • Use consistent currencies, periods and amount scales. Currency selectors use fixed captured exchange rates, not current market rates.

Common questions

Does a ratio below one prove the shares are cheap?

No. Accounting policies, asset quality, profitability and risks affect how book value should be interpreted.

Why is preferred equity deducted?

The calculation aims to isolate the equity attributed to common shares. Use the relevant preferred-equity amount consistently.

References

Require nonnegative prices and deductions and reject undefined zero book-value denominators; retain signed equity and precise contextual conditions.

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