The tangible common equity (TCE) ratio is a useful number to gauge leverage of a financial firm.
(Total shareholders equity - Intangible assets - Preferred stock) / (Total assets - Intangible assets)
Tangible Common equity ratio is used to evaluate the funds that will go to the shareholders after the liquidation of the company. For example, if Tangible common equity ratio = 5%, this means that the remaining 95% of tangible assets were purchased as debt and the finances for them will be returned to the bank.