What is NAV (Net Asset Value)? Calculation formulas and their meaning
NAV – Net Asset Value means net asset value. It is an index used to determine the market value of each business stock.
Formula to calculate NAV:
NAV = (Total Assets – Total Liabilities)/Number of shares outstanding
Means: NAV is the value of a company’s net assets, pegged today, and is entirely dependent on the company’s current net worth. Therefore, through the calculation and analysis of the NAV index, investors can evaluate the shares of a company or business and make a decision whether to invest in these shares or not.
In the event that the nominal value of the shares of the issuing company is lower than the NAV value, this proves that the company has raised capital for production and business activities. This capital is taken mainly from the profits generated by the company. Investors can buy the company’s shares in peace.
In addition, if the NAV is constant, the business generates a high level of profit. Investors can be sure to buy company shares because it can bring you big profits and in a short time.
However, if the NAV index remains the same, the business loses money, the amount of debt is much higher than the NAV value, investors should carefully consider the decision to speculate on stocks there.
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