When analyzing a company that prepares its financial statements according to U.S. GAAP, calculating the price/tangible book value ratio instead of the price/book value ratio is most appropriate if it:
A company that grows primarily through acquisition will have more goodwill and other intangible assets on its balance sheet than a company with fewer acquisitions or that has grown internally. To provide for comparisons with companies that do not follow such a growth strategy, an analyst would remove all intangibles and focus on tangible book value.