Risk Assessments

Is the Tangible Common Equity Ratio still considered a valid way to measure adequate capital?   I have seen mixed comments in my research.
What can be used instead or is this an outdated measure?

Formula below.  Of course not all audited financials are presented in the same format.

((Total Equity - Intangible Assets - Goodwill - Preferred Stock)/Tangible Assets = (Total Assets - Intangible Assets - Goodwill)

The short answer is, yes TCE Ratio is still a valid measure of capital. Like all ratios, though, they are dependent on other metrics to evaluate the overall health of a company. If a company has a poor TCE Ratio in comparison with like companies, there may be other mitigating factors that reduce the risk of having poor financial health. For example, preferred stock and deferred revenue may be positive indicators for a fast-growth startup. Although TCE Ratio is valid, it is difficult to interpret, and I'd love to hear what metrics others are using.
Original Message:
Sent: 09-18-2019 11:35 AM
From: Marie Lockwood
Subject: Financial Analysis Reviews

Is the Tangible Common Equity Ratio still considered a valid way to measure adequate capital?   I have seen mixed comments in my research.
What can be used instead or is this an outdated measure?

Formula below.  Of course not all audited financials are presented in the same format.

((Total Equity - Intangible Assets - Goodwill - Preferred Stock)/Tangible Assets = (Total Assets - Intangible Assets - Goodwill)