Definition of Net Assets value

Net Assets value is simply the total assets of the business less it’s liabilities.

In funds and investment reference Net asset value or NAV is value of per share of mutual fund. It can also be a book value or equity value of the company.

Brief Explanation of Net Assets value

Net value of assets can be expressed in terms of total equity

Net asset value = Total assets – Total Liabilities

or by asset value per share by dividing it by number of shares.

Net asset value = (Assets – liabilities)/ number of outstanding shares

• In investment world NAV of per share is calculated once per day on closing market price.
• Every sale or purchase of fund is done on NAV on that date.
• If return is distributed in the form of dividends, then NAV decreases.
• NAV does not display the complete performance of the fund.
• Total return in turn shows the complete performance. It includes principal appreciation and dividend income.
• Fund accounting also known as investment accounting (portfolio accounting or security accounting) keeps record and accounting process of Net asset value.

Different organizations use different methods to evaluate Net asset value depending on the circumstances, internal practices and purpose.