Net Asset Value Article Index for
Net
Shopping
Asset
Website Links For
Net
 

Information About

Net Asset Value





VARIATIONS


However, while the above definition is simple, there are many different types of entity, and different ways of measuring the value of assets and liabilities.

In the context of Collective Investment s ( Mutual Funds ), ''net asset value'' is the total value of the fund's portfolio less Liabilities . The NAV is usually calculated on a daily basis.

In terms of corporate valuations, ''net asset value'' is the value of Assets less Liabilities .

And, to give an indication of what we could mean by the ''value of assets'', consider some of these variations. Each one achieves something slightly different, and is applied in different ways.


USAGE

Investors might want to know if a company is cheap or expensive to invest in. One possibility is to compare its current Market Capitalization with its ''net asset value'' - since, all things being equal, one might expect them to be the same. There are reasons why this might not be true.

  • NAV covers the company's current asset and liability position. Investors might expect the company to have large growth prospects, in which case they would be prepared to pay more for the company than the NAV suggests.


  • The NAV is usually below the market price because the current value of the fund's assets are higher than the historical Financial Statements used in the NAV calculation. But in the case of for example Liberty Media Corporation , analysts and management has estimated that it's actually trading for 30-50% below its net asset value (or "core asset value").



SEE ALSO



EXTERNAL LINKS