Net asset value (NAV) refers to the market value of single unit and is calculated by dividing the net assets by total number of outstanding units.
Net assets = Total assets – Total liabilities
Outstanding units = Units or shares currently held by shareholders or investors
Net Asset Value Formula:
The following formula can be used in the computation of NAV:
NAV is associated with mutual funds and in that context, it represents market value of single unit of a particular fund. The market value of unit is the price at which unit can be trade in the market.
Net Asset Value Example:
Lets assume that Vikas Yadav wants to invest in mutual fund of XYZ Ltd and has the following figures:
Total assets of mutual fund = INR 1,00,000
Total liabilities of mutual fund = INR 30,000
Total outstanding units : 5,000
He can calculate the market value or NAV as below:
Market value or NAV = (1,00,000 – 30,000)/ 5,000 = INR 14