# What Is Net Asset Value (NAV)?

## Net Asset Value (NAV): Overiew

The net asset value of an investment fund is calculated by dividing the number of outstanding shares by the net value of the fund’s assets less its liabilities. The price at which the shares of funds registered with the U.S. Securities and Exchange Commission (SEC) are traded is referred to as the NAV most frequently when discussing mutual funds or exchange-traded funds (ETFs).

## Understanding Net Asset Value (NAV)

The difference between assets and liabilities for businesses and other legal organizations is referred to as the capital of the firm, net worth, or net assets. The fund value and price, which are determined by dividing the difference between assets and liabilities by the number of shares held by investors, are referred to as NAV.

It is simpler to use the fund’s NAV for pricing and trading fund shares since it represents a “per-share” value of the fund.

NAV is frequently close to or equal to a company’s book value. Historically, companies with strong growth potential have been valued higher than their NAV may indicate. Market capitalization and NAV are typically compared to identify investments that are overpriced or undervalued.

## NAV Calculation Example

Assume a mutual fund has assets totaling \$100 million in a variety of securities, with the value of each investment determined by the asset’s closing price for the day.

It also has \$4 million in total receivables and \$7 million in cash and financial equivalents on hand. The day’s total earned money is \$75,000 The fund owes \$2 million in long-term debt and \$13 million in short-term debt.

The total day’s costs are \$10,000. There are 5 million active shares of the fund. Using the formula above, the NAV is determined as:

NAV = [(\$100,000,000 + \$7,000,000 + \$4,000,000 + \$75,000) – (\$13,000,000 + \$2,000,000 + \$10,000)] / 5,000,000 = (\$111,075,000 – \$15,010,000) / 5,000,000 = \$19.21

The mutual fund shares will trade for \$19.21 per share on the specified day.

## Conclusion

The net asset value of an investment fund is calculated by dividing the number of outstanding shares by the net value of the fund’s assets less its liabilities. The pricing of each share is based on the NAV, and funds may be open or closed. The NAVPS, or per-share value, represents the cost of each fund share.

Related Articles

### The Bear Market is being fought by Aptos (APT), High Street (HIGH), and RenQ Finance (RENQ)

INTRODUCTION As long as the crypto market keeps going up and down, many investors

### Top 10 2023 AI-Enabled Crypto Projects

AI-cryptocurrency innovation is intriguing. AI can now improve crypto transactions using DeFi and blockchain

### Companies in the cryptocurrency industry are adapting their strategies to win over new investors

As the bitcoin sector faces new challenges and possibilities, businesses are adapting their tactics

### Why the crypto sector needs radical openness in the world after FTX?

The crypto industry needs a lot more transparency because it will make it easier

### Top 10 Cryptocurrency Terminology

Cryptocurrencies have recently become very popular, with the market expanding rapidly and luring both

### 2023’s Top 10 Cryptocurrency Profits

In 2023, cryptocurrency investors, traders, and stakers will earn the most money. Online transactions

## Speaker McCarthy Proposes \$1.5 Trillion US Debt-Limit Increase

04/19/2023

Speaker McCarthy Proposes \$1.5 Trillion US Debt-Limit Increase Speaker McCarthy Proposes \$1.5...

## Republicans Propose Spiking Clean-Energy Tax Credits to Raise Debt Limit

04/19/2023

Republicans Propose Spiking Clean-Energy Tax Credits to Raise Debt Limit Republicans Propose...

## Barclays to Shut 21 ETNs a Year After ‘Staggering’ Note Blunder

04/19/2023

Barclays to Shut 21 ETNs a Year After ‘Staggering’ Note Blunder In...

## Stocks Face Hit as \$800 Billion Stimulus to Fade, Citi Says

04/18/2023

Stocks Face Hit as \$800 Billion Stimulus to Fade, Citi Says Stocks...

## Money Markets Bet on ECB Hikes as Banking Crisis Fades From View

04/18/2023

Money Markets Bet on ECB Hikes as Banking Crisis Fades From View...

## Japanese Stocks Have Longest Rally in a Year Amid Buffett Boost

04/18/2023

Japanese Stocks Have Longest Rally in a Year Amid Buffett Boost Japanese...

### EURUSD Trade Plan on News today – September 20 , 2023

I would like to see the Price moving up until

### XAUUSD SHORT TREND ANALYSIS – September 20 , 2023

Gold haven’t broken the upper side yesterday and shows reversal

### XAU/USD DEEP BEARISH GARTLEY PATTERN – September 20 , 2023

We have a very interesting pattern in GOLD (XAU/USD) A

### AUDUSD H4 | Potential bearish reversal – September 20 , 2023

AUDUSD could rise towards a pullback resistance and potentially reverse

### USOIL H4 | Approaching pullback support – September 20 , 2023

USOIL (WTI) is falling towards a pullback support and could

### gold to upside – September 19 , 2023

very strong bullish trend we could see some massive upside