Today, many companies derive a great deal of value from intangible assets and may not have very many tangible assets on their balance sheet. Thus, PTBV is most useful when evaluating capital-intensive companies that rely on hard assets, such as manufacturers or miners.

Why do banks use tangible book value?

TBVPS determines the potential value per share of a company in the event that it must liquidate its assets. Assets such as property and equipment are considered tangible assets.

When should book value be used?

As the accounting value of a firm, book value has two main uses: It serves as the total value of the company's assets that shareholders would theoretically receive if a company was liquidated. When compared to the company's market value, book value can indicate whether a stock is under- or overpriced.