# Net asset value per share

Net asset value (NAV) per share is a measure of a company's net assets available to shareholders divided by the number of its outstanding shares. This figure is typically used for mutual funds and closed-end funds, and gives investors an idea of the fund's financial performance. Specifically, NAV per share is calculated as follows:

NAV Per Share = (Net Assets - Liabilities) / Number of Outstanding Shares

This metric is important to investors because it allows them to compare the value of their shares to that of other funds and make informed decisions about their investments. Furthermore, NAV per share can be used to evaluate the performance of a fund over time by comparing the current NAV to the NAV in previous quarters or years.

In summary, NAV per share is a measure of a company's net assets available to shareholders divided by the number of its outstanding shares. It is an important metric for investors because it allows them to compare the value of their shares to that of other funds and make informed decisions about their investments.

## Example of Net asset value per share

Net asset value per share (NAVPS) can be illustrated through an example. ABC Mutual Fund has $10 million in net assets and 1 million in liabilities. The fund has 500,000 outstanding shares. In this case, the NAVPS would be calculated as follows: NAVPS = ($10,000,000 - $1,000,000) / 500,000 Therefore, ABC Mutual Fund has an NAVPS of$18.

In this example, ABC Mutual Fund has a NAVPS of $18 which indicates that the fund's net assets are$18 per share. This figure can then be used to compare the value of ABC Mutual Fund's shares to that of other funds and make informed decisions about investments.

In summary, Net asset value per share is an important metric for investors because it allows them to compare the value of their shares to that of other funds and make informed decisions about their investments. This can be illustrated through the example of ABC Mutual Fund, which has a NAVPS of \$18.

## Formula of Net asset value per share

Net Asset Value (NAV) Per Share is calculated as follows:

${\displaystyle NAVPerShare={\frac {(NetAssets-Liabilities)}{NumberofOutstandingShares}}}$

This formula allows investors to calculate the NAV per share of a company and compare it to the NAV of other funds in order to make informed decisions about their investments. Furthermore, investors can use NAV per share to evaluate the performance of a fund over time by comparing the current NAV to the NAV in previous quarters or years.

In summary, the formula for NAV per share allows investors to calculate the NAV per share of a company and compare it to the NAV of other funds. This can be used to make informed decisions about their investments, as well as evaluating the performance of a fund over time.

## When to use Net asset value per share

Net asset value (NAV) per share is an important metric for investors because it allows them to compare the value of their shares to that of other funds and make informed decisions about their investments. NAV per share can be used in the following situations:

• When evaluating the performance of a fund over time: NAV per share can be used to evaluate the performance of a fund over time by comparing the current NAV to the NAV in previous quarters or years.
• When making investment decisions: NAV per share can be used to compare the value of different funds and make informed decisions about which funds to invest in.
• When assessing risk: NAV per share can be used to assess the risk of investing in a particular fund since it can provide an indication of the fund's financial health.

## Types of Net asset value per share

Net asset value per share is typically divided into two categories: market net asset value (MNAV) and fair value net asset value (FNAV).

Market net asset value (MNAV) is calculated based on current market prices for the fund's investments. This type of NAV represents the fund's portfolio value at the time of calculation and is the most accurate reflection of the fund's worth.

Fair value net asset value (FNAV) is calculated based on the fair value of the fund's investments, which may be higher or lower than their current market price. This type of NAV is used to account for the difference between a fund's market and fair value, and is not always an accurate reflection of the fund's portfolio value.

## Steps of Net asset value per share

The steps for calculating Net Asset Value per share are as follows:

• Step 1: Calculate the total net assets of the company by subtracting liabilities from assets.
• Step 2: Divide the total net assets by the number of outstanding shares.
• Step 3: The result is the Net Asset Value per share.

## Advantages of Net asset value per share

Net asset value per share has several advantages that make it an important tool for investors. These advantages include:

• Transparency: NAV per share provides investors with a clear and transparent view of the financial health of a fund. This helps investors to make informed decisions about their investments.
• Easy to compare: NAV per share also provides investors with a way to easily compare the performance of different funds. This allows them to make better decisions about which funds to invest in.
• Historical data: NAV per share also allows investors to track the performance of a fund over time. This helps them to identify trends and determine if the fund is performing well or not.

## Limitations of Net asset value per share

Net asset value per share has some limitations that investors should consider when evaluating a fund. These include:

• The NAV does not account for potential changes in the market value of the fund's investments. This can lead to inaccurate assessments of the fund's performance.
• The NAV may not accurately reflect the fund's true performance in the short-term because of the volatility of the market.
• NAV per share is only one metric used to assess the performance of a fund and should not be used in isolation. Other metrics such as expense ratios, performance history, and fees should also be taken into consideration.

## Other approaches related to Net asset value per share

Besides NAV per share, there are several other metrics related to net asset value that investors can use to evaluate a fund's performance. These include:

• Total Return: This is the total return over a period of time, expressed as a percentage. It takes into account both capital gains and income from dividends or interest.
• Market Value: This is the market value of the fund's investments and liabilities, as of a certain date.
• Portfolio Turnover: This is a measure of the amount of trading activity in the fund's portfolio. It is expressed as a percentage and is calculated by dividing the total value of all trades over a period of time by the average net asset value of the fund during that period.

 Net asset value per share — recommended articles Earnings per share — Investment ratio — Unlevered beta — Profitability index — Return on equity (ROE) — Cumulative abnormal returns — Accounting rate of return — Average annual growth rate — Net present value (NPV)