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Financial Glossary
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> "Net asset value" Definition |
 Net asset value
The 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.
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Glossary 
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Dictionary
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Net asset value - The 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.
Net asset value : the 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.
