Investment Formula Description

Net asset value ( NAV ) is commonly used in unit trust and mutual fund to describe the value of  the fund's assets less the value of its liabilities.

units to get net asset value ( NAV ) per share and this will be the original selling price for the unit trust or mutual fund before adding in any charges and fees. The net asset value ( NAV ) per share for unit trust and mutual fund will be calculated daily on the closing market price to reflect the changes of the value.

For companies, net asset value ( NAV )  is the book value for the companies deducting intangible assets and liabilities from its total assets. Net asset value ( NAV ) for companies is always used in price book ratio ( P/B ratio ) or market to book ratio to compare companies' net asset value ( NAV ) with its market value. If the net asset value ( NAV ) is higher than market value, a lot of investors believe that the companies might be undervalued. Normally, investors can find net asset value ( NAV ) in balance sheet.

Investment Formula

Investment Formula Example

Based on the closing market price, mutual fund ABC has $ 3,576,000 total assets and its liabilities is $1,250,000. The net asset value ( NAV ) calculation for mutual fund ABC is as following.

Net Asset Value ( NAV ) = Total Assets - Liabilities = 3,576,000 - 1,250,000 = $2,326,000

The net asset value ( NAV ) for mutual fund ABC is $2,326,000.  Assuming mutual fund has total outstanding unit of 1,500,000. The net asset value ( NAV ) per share calculation for mutual fund ABC is as following.

Net Asset Value ( NAV )  per share = Net Asset Value ( NAV ) / Total outstanding shares = 2,326,000 / 1,500,000 = $1.55

Every unit share of mutual fund ABC has $1.55 net asset value ( NAV ) per share.Mutual Fund companies will take this net asset value ( NAV ) per share as base price to sell the mutual fund to public.

Total Assets for corporation ABC is $2,000,000 while the intangible assets is $1,000,000 and the liabilities is $500,000. The net asset value ( NAV ) calculation for corporation ABC is as following.

Net Asset value ( NAV ) = Total Assets - Intangible Assets - Liabilities = 2,000,000 - 1,000,000 - 500,000 = $ 500,000

Net asset value ( NAV ) for corporation ABC is $500,000.