Net Asset Value

The value of an entity's assets minus its liabilities. Often used with reference to collective investment schemes. The net asset value of an open-ended mutual fund or unit trust is calculated daily by dividing the fund's net value by the number of outstanding shares. This is the price at which investors can buy or sell shares in the fund. The net asset value of a company is its assets minus its liabilities and goodwill; sometimes referred to as its book value. Normally, a company's net asset value will be lower than its market capitalization. The value of its net assets at any one time is likely to be greater than in past financial statements and if investors believe the company has reasonable growth prospects they will be prepared to pay more than the net asset value.