Question

Assume that you have just purchased some shares in an investment company reporting $560 million in assets, $40 million in liabilities, and 40 million shares outstanding. What is the net asset value (NAV) of these shares

Answer 1

The net asset value of the company is 13 million dollars per share.

Step-by-step explanation:

Net asset value is a measure to represent the value of a company by share. The concept works under the following formula: Assets-liabilities Divided by the outstanding shares. It is a fundamental used to find out if the stock price is undervalued, overvalued or in price. Very similar to P/B and Free cash per share. To calculate it you find the value of its assets in the balance sheet and subtract the liabilities. The result will be divided by the total outstanding shares and t will be equal to a value to share. That is the most important factor here, it establishes a representation of the total assets of the company to each share.

Answer 2

NAV = 13 million

Step-by-step explanation:

Given that:

• assets: $560 million
• liabilities: $40 million
• shares outstanding: $40

<=> Net Asset = Assets - Liabilities = $560 million - $40 million = $520 million

As we know that the formula to find net asset value is:

NAV = Net Assets ÷ Outstanding no. of share

<=> NAV = $520 million : $40 million

<=> NAV = 13 million

Hope it will find you well.