Net Asset Value Formula

The net asset value (NAV) is usually used in mutual and unit trust fund describing the value of funds of assets and less the value of liabilities. It is also referred as net book value or book value and the term may also be used in many places in different meanings. Net asset value mostly used in mutual and unit trust fund to signify total value of the portfolio of the fund less its liabilities.

For mutual and unit trust fund, the liabilities may be the owed money to investment trustees and managers. Mutual fund and unit trust companies will divide the NAV with total outstanding units in order to get the net asset value per share. This will then be the selling price for the mutual and unit trust fund before adding any fees and charges.

The net asset value per share for mutual and unit trust fund is daily calculated in the closing market price reflecting the value change.

The net asset value in companies is the book value deducting liabilities and intangible assets from the total assets. For companies, the net asset value is always used in market book ratio or price book ratio to compare the net asset value of the company with its market value. If the net asset value is bigger than the market value, many investors will believe that a particular company may be undervalued. Investors can normally find the net asset value in the balance sheet.

Net Asset Value Formula Investment Formula

Net asset value mutual fund = total assets – liabilities

Net asset value per share = net asset value/total outstanding shares

Net asset value = total assets – intangible assets – liabilities

Example of Investment Formula

Based on the market price, the mutual fund DEF has $3,576,000 total assets and the liabilities are $1,250,000. To calculate the net asset value for mutual fund DEF is the following:

Net asset value = total assets – liabilities = $3,576,000 – $1,250,000 = $2,326,000

The mutual fund DEF’s net asset value is $2,326,000. Assuming that the total outstanding unit of mutual fund is $1,500,000. The calculation for net asset value per share for mutual fund DEF is the following:

Net asset value per share = net asset value/total outstanding shares = $2,326,000/$1,500,000 = $1.55

Every mutual fund DEF unit share has a net asset value per share of $1.55. Companies of mutual fund will treat this net asset value per share as a base price in selling the mutual fund to the public.

The total assets of ABC corporation is $2,000,000 and its intangible asset is $1,000,000 and its liabilities is $500,000. The calculation for net asset value of ABC corporation is the following:

Net asset value = total assets – intangible assets – liabilities = 2,000,000 – $1,000,000 – $500,000 = $500,000

The net asset value for ABC corporation is $500,000.

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