See: Tangible Book Value. That number goes in the denominator. (See: Book Value while you're at it, so you know what intangibles to subtract out) Then in the numerator? Well, price, duh.
So how do you make the numbers foot? Well, you'd take the total number of shares outstanding and get a TBV, or tangible book value per share number. Like...if TBV is $20 million and there are 40 million shares out, then the company has tangible book value per share of 50 cents.
So then...the price? Well, that'd probably be the price per share if the company was public (and most private companies that are large track the same.) If the company's stock is trading at 8 bucks, then the price to tangible book value is 8 divided by 50 cents of 16 times. What does that mean? Well, almost nothing, really. It's just an accounting term. It just means that the company has TBV of 50 cents, and it's worth 16 times that number.
Woot? Yeah, we don't know either. In theory, book value is the value of all the assets of the company, so if the business itself went awry, you'd sell everything and just liquidate whatever at book value. So 16 times that number is big...but it probably just means that the company doesn't have a ton of tangible book value assets in their coffers, so...it's just another data point along the accounting highway.
Related or Semi-related Video
Finance: What are Fixed Assets, Tangible...26 Views
finance a la shmoop what are fixed assets and no they're not what people
gratefully have when they leave the proctologist office fixed assets are
fixed as in fixed in place hard items things you can kick in you know whiz on [man tried to pull sword out of stone]
general rules for fixed assets one they're not used up in that accounting
year like inventory isn't a fixed asset and two they're typically in physical
form like a contract or a patent is not a fixed asset and three they're listed [contract and patent docs]
as property plant and equipment on the balance sheet at least usually fixed
assets you have land and you have plants and you have computers the software on
them all fixed assets and these are tangible ones so then what are
intangible fixed assets well basically things that are not
touchable or physically you know they're not feel about those would be things
like well our shmoop logo our shmoop guides intellectual property the stuff [Shmoop website images]
you're watching right now and other copy written material all that kind of stuff
intangible that famous factory smelting plant we're always talking about here [something gets thrown into industrial smelting pot]
from up fixed tangible asset the hundred eighty eight acres of the legal pot
growing farm owned by Mary Jane industries fixed asset the secret recipe [Mary Jane in her pot farm]
owned by coke which names the ingredient beyond sugar in the fizzy water that
makes coke oh so great intangible fixed asset anyway these big fat fixed assets
carry heft and illiquidity like you can't just quickly sell a hundred eighty
eight acres of a pot farm in well get a whole lot of money for it same deal with [Mary Jane unhappy with her attempt to sell the farm]
the smelting factory or eight miles of styrofoam packing peanuts [shower of packing peanuts]
even if they do as our proctologist says give you you know more cushion for the
pushin don't eat those things [doctor gives man a shot]
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