Return on tangible equity (ROTE) (also return on average tangible common shareholders' equity (ROTCE)) measures the rate of return on the

tangible common equity Tangible common equity (TCE), the subset of shareholders' equity that is not preferred equity and not intangible assets, is an uncommonly used measure of a company's financial strength. It indicates how much ownership equity owners of common stock ...

. ROTE is computed by dividing net earnings (or annualized net earnings for annualized ROTE) applicable to common shareholders by average monthly tangible common shareholders' equity.Return on Average Tangible Common Shareholders' Equity
/ref> Tangible common shareholders' equity equals total shareholders' equity less

preferred stock Preferred stock (also called preferred shares, preference shares, or simply preferreds) is a component of share capital that may have any combination of features not possessed by common stock, including properties of both an equity and a debt ins ...

, goodwill, and identifiable

intangible asset An intangible asset is an asset that lacks physical substance. Examples are patents, copyright, franchises, goodwill, trademarks, and trade names, as well as software. This is in contrast to physical assets (machinery, buildings, etc.) and finan ...

References

{{Financial ratios Financial ratios