{"id":11902,"date":"2023-03-15T17:49:44","date_gmt":"2023-03-15T12:19:44","guid":{"rendered":"https:\/\/razorpay.com\/blog\/?p=11902"},"modified":"2025-03-07T08:23:51","modified_gmt":"2025-03-07T02:53:51","slug":"net-asset-value","status":"publish","type":"post","link":"https:\/\/razorpay.com\/blog\/business-banking\/net-asset-value\/","title":{"rendered":"A Complete Guide on Net Asset Value"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Net Asset Value (NAV) is the net value of an entity&#8217;s total assets minus its total value of <a href=\"https:\/\/razorpay.com\/learn\/what-is-liability-in-accounting\/\">liabilities<\/a>, further divided by the number of outstanding shares. NAV is commonly used in the context of mutual funds. It helps investors to analyse whether the fund is overvalued or undervalued and the way underlying assets have performed in preceding years.<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69db128a2b8f6\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69db128a2b8f6\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/net-asset-value\/#What_Is_the_Formula_for_Net_Asset_Value\" >What Is the Formula for Net Asset Value?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/net-asset-value\/#What_Is_the_Net_Value_of_Assets_for_Mutual_Funds\" >What Is the Net Value of Assets for Mutual Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/net-asset-value\/#The_Role_of_NAV_in_the_Performance_of_Fund\" >The Role of NAV in the Performance of Fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/net-asset-value\/#How_Net_Asset_Value_is_Relevant_for_Investors\" >How Net Asset Value is Relevant for Investors?<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What_Is_the_Formula_for_Net_Asset_Value\"><\/span><b>What Is the Formula for Net Asset Value?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The net asset value of the fund shows the &#8216;per-share&#8217; value of funds, making it convenient for transacting and valuing fund shares. <\/span><\/p>\n<blockquote><p><strong>Net Asset Value (NAV) = (Total asset \u2013 Total Liabilities) \/ Total outstanding shares<\/strong><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">It is important to put the accurate qualifying entities under assets and liabilities to get the proper NAV (Net Asset Value)<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For business entities, the difference between net assets and liabilities is referred to as net worth\/ net assets or capital. This term is applicable for fund pricing and valuation.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_Is_the_Net_Value_of_Assets_for_Mutual_Funds\"><\/span><b>What Is the Net Value of Assets for Mutual Funds?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Mutual funds gather funds gathered from different investors and invest the same in securities like bonds, stocks, etc. Each investor has a specific number of shares in their invested fund; the pricing of each of these shares is dependent on NAV.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Mutual funds are computed depending on the trading method and are primarily based on different assets and liabilities.<\/span><\/p>\n<ul>\n<li aria-level=\"1\"><b>Assets\u00a0<\/b><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The asset part of mutual funds encompasses the total market value of receivables, investments, cash equivalents, cash etc., of a specific fund. This market worth is evaluated depending on end-of-the-day methodologies which are further dependent on closing price of different securities that are present in the portfolio of the fund.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These amounts consist of a certain percentage of capital in the form of cash, liquid assets, dividends, interest payments etc.\u00a0<\/span><\/p>\n<ul>\n<li aria-level=\"1\"><b>Liabilities<\/b><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">While calculating net asset value of mutual funds, the liabilities portion of mutual funds encompasses amount owed to lenders, outstanding payments and additional charges and fees given out to associated entities. Liabilities can also consist of other accrued expenses like staff salaries, management expenses, utilities, operating expenses etc.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Besides these liabilities, mutual funds may also contain foreign liabilities, including <a href=\"https:\/\/razorpay.com\/learn\/what-is-a-pending-payment\/\">pending payment<\/a> that is to be given to foreign conglomerates, shares of non-residents and other sale proceeds.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_Role_of_NAV_in_the_Performance_of_Fund\"><\/span><b>The Role of NAV in the Performance of Fund<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Net value of an asset is often considered the same as that of the stock price. Hence, it is believed that the funds which come with a lower NAV (Net Asset Value) are affordable and are a better investment. However, it is imperative to note that net asset value computation cannot be correlated with performance of funds. Hence, a fund with a lower NAV will not necessarily be a comprehensive instrument.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">NAV shows how the assets have functioned earlier. Hence, investors should not consider net asset value as the deciding factor while opting for funds to make an investment.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">NAV determines the value of funds that investors will be entitled to get at the time of investment withdrawal. The overall performance of a specific scheme of mutual funds is determined by NAV.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_Net_Asset_Value_is_Relevant_for_Investors\"><\/span><b>How Net Asset Value is Relevant for Investors?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The net value of asset is perceived to be the same as stock price. Hence, it is considered that funds with lower net asset value are economical. For investors the NAV acts as a metric reflecting total shareholder equity position and aids in finding new investment opportunities.\u00a0<\/span><\/p>\n<p><b>How RazorpayX Enhances Financial Productivity of Start-ups?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">RaxorpayX, the business arm of Razorpay assists small businesses and start-up founders in manifold ways. This efficient business banking platform extends the advantages of instant tax payments, managing bulk vendor invoices, schedule payments and more.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This platform also enables businesses to get entire financial reports and access the same from a single dashboard. With RazorpayX-powered <\/span><a href=\"https:\/\/razorpay.com\/x\/current-accounts\/\"><span style=\"font-weight: 400;\">current accounts<\/span><\/a><span style=\"font-weight: 400;\">, business bodies can solve their banking needs. In addition, the platform enables smooth accounting software integration.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Besides ensuring positive cash flow, business bodies can also rely on RazorpayX <\/span><a href=\"https:\/\/razorpay.com\/payroll\/\"><span style=\"font-weight: 400;\">payroll<\/span><\/a><span style=\"font-weight: 400;\"> services and automate salary payments and extend insurance to employees. This service automates payments and filings of different compliances like PT, TDS, PF, ESI and more. These services cumulatively enhance business operations, help in cost-cutting and increases long-term productivity.\u00a0<\/span><\/p>\n<div style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/x\/?r=blog_cta_business_net_asset_value&amp;utm_source=blog&amp;utm_medium=cta\" target=\"_blank\" rel=\"noopener\">Explore RazorpayX<\/a><\/div>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Net Asset Value (NAV) is the net value of an entity&#8217;s total assets minus its total value of liabilities, further divided by the number of outstanding shares. NAV is commonly used in the context of mutual funds. It helps investors to analyse whether the fund is overvalued or undervalued and the way underlying assets have<\/p>\n","protected":false},"author":106,"featured_media":11903,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[27],"tags":[456],"class_list":{"0":"post-11902","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business-banking","8":"tag-net-asset-value"},"_links":{"self":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/11902","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/users\/106"}],"replies":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/comments?post=11902"}],"version-history":[{"count":2,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/11902\/revisions"}],"predecessor-version":[{"id":21319,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/11902\/revisions\/21319"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media\/11903"}],"wp:attachment":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media?parent=11902"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/categories?post=11902"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/tags?post=11902"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}