It stands for average tangible common equity; a measure of common equity that is calculated by subtracting the average balance of intangible assets from the average common shareholders’ equity for the same period in question, with the net amount divided by tangible assets.
In equation form:
Average tangible common equity = (average common shareholder’s equity – intangible assets) ÷ (total assets – intangible assets)
Alternatively, it can be expressed as tangible equity divided by tangible assets.
