What is net asset value?

Net assets value or in short NAV contains the following, loan capital, fund’s holdings and from this amount we subtract the operating costs and divide it by the number of shares. For example companies which are people based have a low NAV then the ones which are equipment or production oriented. If we’re looking at an advertising company which has little or almost nothing invested in to equipment, and it generates profit by people ideas it is understandable why it’s NAV is low. The most common usage of this value is for estimating the stock’s price of an investment trust. Another example if a company has a NAV of $60 and the share price is $50 then there’s a $10 cushion. While the NAV changes on a regular basis the daily variations are small.