Net assets are more commonly referred to as equity. This is the amount of retained earnings that are left in the business. In other words, the retained earnings or profits made by the company are not distributed to the owners. The profits are left in the business to help it grow.
Explanation :
Net assets means the same thing as equity with a slight twist. Net assets refers to equity as the amount of the business the owners actually own. It’s the owners’ claim to the assets of the company. The net asset value (NAV) represents the net value of an entity and is calculated as the total value of the entity’s assets minus the total value of its liabilities. Most commonly used in the context of a mutual fund or an exchange traded fund (ETF), the NAV represents the per share/unit price of the fund on a specific date or time. NAV is the price at which the shares/units of the funds registered with the U.S. securities and Exchange commission are traded (invested or redeemed).
In a nutshell :
- Net asset value, or NAV, is equal to a fund's or company's total assets less its liabilities.
- NAV, is commonly used as a per-share value calculated for a mutual fund, ETF, or closed-end fund.
- For an investment fund, NAV is calculated at the end of each trading day based on the closing market prices of the portfolio's securities. For firms, NAV can be construed as close to its book value.
- A firm's or fund's shares may trade in the market at levels that deviate from its NAV.
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