Tangible Common Equity is the part of the common shareholders' stake that is backed by tangible assets. It starts from Total Common Equity and removes intangible assets such as patents, trademarks and goodwill, which usually cannot be sold separately to absorb losses. It can help measure a company's financial strength and its ability to withstand write-downs. Because it is built on the same base as Book Value per Share, the two are directly comparable and the gap between them is exactly the intangible assets. The formula for Tangible Common Equity is:
Tangible Common Equity = Total Common Equity - Total Intangible Assets
Where:
- Total Common Equity is R0132,
tot_common_eqy
- Total Intangible Assets is BS029,
bs_disclosed_intangibles