A financial ratio that relates net income available to common shareholders (holders of common share/ common equity) by (average tangible common equity or average TCE) average tangible common equity (TCE). Average tangible common equity is calculated by subtracting the average balance of intangible assets from the average common shareholders’ equity for the same period in question.

This ratio provide insightful information to shareholders (and other stakeholders such as investors and regulators) as tangible equity is a measure compatible with the inputs used in calculating regulatory capital (for capital adequacy purposes) which excludes intangible assets in the calculation of risk-based ratios.