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Net asset value |
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Net asset valueThe total assets of a company less all its liabilities including loan capital, and preference shares. NAV is usually expressed on a per share basis. For example:assets of a company = £12,000,000, liabilities = £3,000,000number of ordinary shares = 18,000,000NAV per share = (£12,000,000 - £3,000,000) / 18,000,000 = 50pHow relevant is NAV for investors in companies? For people-based businesses it is not particularly relevant. An advertising agency, for instance, would have a very low NAV because it has little invested in plant and equipment, and its profitability is driven by people and ideas. Elsewhere, NAV is interesting to value investors who want to know what underpins a company's share price. If a company has a NAV of 120p and its share price is 100p, there is a 20p cushion.The most common use of NAV is in assessing the share price of investment trusts - collective funds which invest in other companies. It is fairly easy to calculate the NAV of investment trusts because their assets are for the most part quoted companies. Investment trusts trade at a discount or premium to their NAV.Similar MatchesAssetAssetAn item of property, such as land, capital, money, a share in ownership, or a claim on others for future payment, such as a bond or a bank deposit. Risky assetRisky assetAn asset whose future return is uncertain. Net exposed assetsNet exposed assetsExposed assets less exposed liabilities. This term is used with market values or, in translation accounting, with book values. Earning assetEarning assetAn asset that generates income, e.g., income from rental property. Financial assetFinancial assetAn asset whose value arises not from its physical embodiment (as would a building or a piece of land or capital equipment) but from a contractual relationship: stocks, bonds, bank deposits, currency, etc. Further SuggestionsAsset for asset swapAsset based financing Wasting Assets wasting asset assets Risk free asset Policy asset allocation net assets Quick assets Cash asset ratio Fixed asset International Asset Pricing Model (IAPM) Intangible asset capital assets Net quick assets Asset substitution Noncurrent asset Capital Assets Defined asset fund free assets Monetary assets and liabilities Asset management account capital asset pricing model Return on assets (ROA) fixed assets |
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