Tangible book value is widely used for valuing financial services companies, where tangible book value is primarily cash or liquid assets.

Question

Quizplus · Accepted Answer

Tangible book value is crucial for valuing financial services companies because it reflects the net asset value of the company, excluding intangible assets and liabilities, which often consists largely of cash or liquid assets. This measure provides a clear picture of what the company's physical, tangible assets are worth, which is particularly relevant for financial institutions whose balance sheets are heavily composed of liquid assets.

Tangible Book Value Is Widely Used for Valuing Financial Services