when to use price to tangible book value
ptbv is applicable mainly to industrial or capital intensive companies like auto manufacturers and oil refiners these companies have hard assets of high value ptbv is relatively meaningless as a valuation measure in the technology sector for instance because much of a tech company s valuation derives from its intellectual property an intangible asset calculating ptbv can be tricky in some instances such as for companies that have land that has been held for decades the land is stated on the books at its historical cost not marked up each year on the balance sheet resulting in a deceptively high ptbv ratio example of price to tangible book valueas of the quarter ending june 30 2023 the tangible book value of general motors was about 71 billion total net assets of 276 billion less 5 billion of goodwill and intangible assets minus about 200 billion in liabilities there were 1 4 billion shares outstanding yielding a tangible book value per share of about 50 7the closing price per share of gm on the last day of 2020 was 38 56 therefore ptbv was 71 50 7 or 1 4 an analyst could study the trend of this ratio or compare it with those of its peer group 