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.

 Net asset value ( NAV ) sometimes is also referred as book value or net book value ( NBV ), can be used in multiple place for different meanings.  Net asset value ( NAV ) most commonly used in unit trust and mutual fund to indicate total value of the fund's portfolio less its liabilities.For unit trust and mutual fund, the liabilities can be the money owed to investment managers and trustee. Unit trust or mutual fund companies will then divide the net asset value ( NAV ) with total outstanding 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

Mutual Fund Net Asset Value ( NAV ) = Total Assets - Liabilities

Net Asset Value ( NAV ) per share = Net Asset Value ( NAV ) / Total outstanding shares

Net Asset value ( NAV ) = Total Assets - Intangible Assets - Liabilities

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.

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