Tangible Common Equity (TCE)

WA Business News  May 4  Comment 
Landlords of Perth CBD’s older buildings are upgrading their facilities to keep pace with new builds.
The Economic Times  Dec 27  Comment 
Traditional Knowledge (TK) and Traditional Cultural Expression (TCE), handed down generations, may soon be recognized as a form of intellectual property.
Benzinga  Jul 30  Comment 
In a report published Tuesday, Jefferies analyst Douglas J. Mavrinac reiterated a Buy rating on Diana Containerships (NASDAQ: DCIX), but lowered the price target from $6.00 to $5.00. In the report, Jefferies noted, “This morning, Diana...
WA Business News  Jul 25  Comment 
The team behind some of the city's most progressive venues has a new project that promises to be a little bit Spanish and a little bit Latin.
The Hindu Business Line  Feb 5  Comment 
Tata Consulting Engineers Ltd (TCE) has acquired Ecofirst Services Pvt Ltd, a joint venture between Milestone Capital Advisors Ltd and J. Leon Group (UK). Financial terms of the acquisition were n...
Benzinga  Oct 18  Comment 
Washington Federal, Inc. (NASDAQ: WAFD), parent company of Washington Federal, today announced earnings of $35,531,000 or $.33 per diluted share for the quarter ended September 30, 2012, compared to $30,666,000 or $.28 per diluted share for the...
Cloud Computing  Jul 16  Comment 
Keynote® Systems (Nasdaq: KEYN) subsidiary, Keynote DeviceAnywhere®, the global leader in mobile application lifecycle management (mALM), has announced that the Variable Annuity Life Insurance Company or VALIC has...
Forbes  Mar 10  Comment 
Most investors understand the benefits and risks of leverage. Anyone who bought a house in the last 10 years has an appreciation for leverage. Those who borrowed most if not all of the money to buy a house saw both sides of leverage. While housing...
The Hindu Business Line  Feb 22  Comment 
An alternative to cement concrete block has been developed by Thiagarajar College of Engineering (TCE), here. The new ‘Plastone block technology' developed by the Department of Chemistry,...
New York Times  Nov 14  Comment 
TCE, a solvent widely used in refrigerants and as a metal degreaser, is associated with an increased risk of Parkinson’s disease, researchers have found.


Tangible common equity equals book value minus intangible assets, goodwill, and preferred equity

Tangible common equity, (also known as "tangible equity capital," or occasionally "tangible common book value") is the book value of the company minus the value of all assets that would be worthless if the company were to liquidate, as well as all preferred equity. Specifically, this is equivalent to total equity minus Intangible assets, goodwill, and preferred equity.

Functionally, the metric is similar to tangible book value in that it removes subjective components of valuation (intangible assets and goodwill) from the calculation of a company's underlying worth. However, as tangible common equity also subtracts preferred equity from the book value, it does a better job estimating what the value of the company is to holders of specifically common stock. In this sense, tangible common equity can be considered the most conservative valuation of a company and the best approximation of the company's value should it be forced to liquidate.

The metric is particularly useful in analyzing companies with significant preferred equity. While simply discounting goodwill and intangible assets to arrive at tangible book value is effective in comparing a company's "hard assets" with those of subjective value, further subtracting preferred equity gives a more complete picture of just how much the company's "stuff" is worth to common shareholders. As such, the metric has come into use as a means of valuing banks that have issued significant preferred equity, such as those receiving government bailout money.[1]

It should be noted that for companies without preferred equity, tangible common equity and tangible book value are identical; as such, in companies with preferred stock, a significant discrepancy between these two figures might indicate an incommensurate amount of preferred equity.

In the News

On February 22nd, 2009, and February 24th, 2009 The Wall Street Journal and New York times (respectively) reported the Federal Reserve, in determining which banks were healthy and which ones required additional capital injections by the government, would "dwell on" tangible common equity as a measure of banks' health. [2][1] This makes it harder for banks with significant amounts of intangibles on its balance sheet to be classified as "healthy".


  • In its most recent quarterly filing, Company XYZ reported $5 million in total assets and $3 million in total liabilities for a total book value of $2 million (5 - 3 = 2). Of the $5 million in assets, $600 thousand is in intangible assets and $400 thousand is in goodwill. The company's preferred equity is $500 thousand. Thus, the tangible book value is $1 million ($2 million book value – $.6 million intangible assets – $.4 million goodwill = $1 million) and the tangible common equity of the company is $500 thousand ($1 million tangible book value – $.5 million preferred equity = $500 thousand).
  • In its most recent quarterly filing, Company ABC reported $10 million in total assets and $6 million in total liabilities for a total book value of $4 million (10 - 6 = 4). Of the $10 million in assets, $2 million is goodwill and $1 million is intangible assets. The company has no preferred equity. Thus, the tangible book value and the tangible common equity are equivalent at $1 million ($4 million book value – $2 million goodwill – $1 million intangible assets, – $0 preferred equity = $1 million).
  • In its most recent quarterly filing, Company LMN reported $20 million in total assets and $8 million in total liabilities for a total book value of $12 million (20 - 8 = 12). The company carries no intangible assets or goodwill. The company's preferred equity is $2 million. Thus, the total book value and tangible book value are the same at $12 million, while the tangible common equity is $10 million ($12 million book value – $0 goodwill – $0 intangible assets – $2 million preferred equity = $10 million).


  1. 1.0 1.1 New York Times Article discussing Tangible Common Equity in the recent valuation of banks, 2/24/2009.
  2. US Eyes Large Stake in City, Wall Street Journal, Feb 22 2009.
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