How to Value Shares (6)

Net asset value


The shares or units of organizations such as mutual funds and investment companies are valued using ‘net asset value’.

This is obtained by subtracting the total liabilities of the firm from its total assets.

For instance, if the total assets of the mutual fund is £100 million, and its liabilities, sum up to £10 million,

then the net asset value is £100 million minus £10 million, which gives £90 million.

The value of each unit or share is then arrived at by dividing the net asset value by the units or shares outstanding.

In this example, if there are 2 million units outstanding,

the ‘per unit net asset value’ is £90 million divided by 2 million which is £45 per unit.

Net asset value as well as per share/unit net asset values are revised daily and published in newspapers.



By David Opoku