Tangible Common Equity (TCE)

Tangible common equity (TCE) is a measure of a company's financial health that excludes intangible assets, such as goodwill and patents. It is calculated by taking a company's total equity and subtracting its intangible assets.

TCE is important because it provides a more accurate picture of a company's financial position than total equity. This is because intangible assets can be difficult to value and can often be overstated. By excluding intangible assets from equity, TCE provides a more conservative estimate of a company's ability to pay its debts.

TCE is also used as a measure of a company's solvency. A company is considered to be solvent if it has enough assets to cover its liabilities. TCE is a good indicator of a company's solvency because it excludes intangible assets, which can be difficult to sell in the event of a liquidation.

In addition to being used as a measure of financial health and solvency, TCE can also be used to compare companies within the same industry. This is because TCE is not affected by differences in the intangible assets of different companies.

Overall, TCE is a valuable metric for assessing a company's financial health. It provides a more accurate picture of a company's financial position than total equity and can be used to compare companies within the same industry.

Here are some additional points about TCE:

* TCE is also known as net tangible assets (NTA).
* TCE is sometimes used as a proxy for book value per share.
* TCE can be used to calculate a company's debt-to-equity ratio.
* TCE is a key metric for credit rating agencies.