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What is Net Asset Value per Share – NAVPS?
Net asset value per share (NAVPS) is a term for net asset value that represents the value per share of a mutual fund, exchange-traded fund (ETF) or closed-end fund. It is calculated by dividing the total net asset value of the fund or company by the number of shares outstanding and is also known as the book value per share.
The formula for the Net Asset Value per Share – NAVPS is
Net Asset Value per Share
=
NAV
Outstanding Shares
Where:
NAV
=
financial assets
−
liabilities
begin{aligned} &text{Net Asset Value per Share} = frac{ text{NAV} }{ text{Outstanding Shares} } &textbf{where:} &text{NAV} = text{assets} – text{liabilities} end{aligned} Net Asset Value per Share=Outstanding SharesNAVWhere:NAV=financial assets−liabilities
How to calculate Net Asset Value per Share – NAVPS
The Net Asset Value per Share (NAVPS) is calculated by dividing the Net Asset Value by the number of Shares outstanding.
What does NAVPS tell you?
Net asset value per share (NAVPS) is often used in relation to mutual funds or mutual funds because shares of such funds that are registered with the US Securities and Exchange Commission (SEC) are redeemed at their net asset value.
With reference to the Net Asset Value Per Share (NAVPS) formula above, Assets include the total market value of the Fund’s investments, cash and cash equivalents, receivables and accrued income. Liabilities equal total current and non-current liabilities plus any accrued expenses such as B. staff salaries, ancillary costs and other operating expenses. The total number of costs can be high as it can include administration costs, sales and marketing costs, transfer agent fees, custodian and auditing fees.
The central theses
- NAVPS represents the value per share of a mutual fund, ETF or closed-end fund.
- It is often used in relation to mutual funds as shares are redeemed at their NAV.
- However, market price and NAVPS may vary for closed-end funds and ETFs.
Example of using Net Asset Value per Share – NAVPS
Imagine a mutual fund with 7.5 million shares outstanding has $500 million in investments, $15 million in cash, $1.5 million in receivables, and $250,000 in accrued income -Dollar. In terms of liabilities, the fund has current liabilities of US$20 million and long-term liabilities of US$5 million. The fund has $35,000 in operating expenses and $15,000 in other expenses. The assets, liabilities and NAVPS are calculated as follows:
financial assets
=
$
5
0
0
,
0
0
0
,
0
0
0
+
$
1
5
,
0
0
0
,
0
0
0
+
$
1
,
5
0
0
,
0
0
0
fortune =
+
$
2
5
0
,
0
0
0
=
$
5
1
6
,
7
5
0
,
0
0
0
liabilities
=
$
2
0
,
0
0
0
,
0
0
0
+
$
5
,
0
0
0
,
0
0
0
+
$
3
5
,
0
0
0
liabilities
=
+
$
1
5
,
0
0
0
=
$
2
5
,
0
5
0
,
0
0
0
NAVPS
=
$
5
1
6
,
7
5
0
,
0
0
0
−
$
2
5
,
0
5
0
,
0
0
0
7
,
5
0
0
,
0
0
0
=
$
4
9
1
,
7
0
0
,
0
0
0
7
,
5
0
0
,
0
0
0
=
$
6
5
.
5
6
begin{aligned} text{assets} =& $500,000,000 + $15,000,000 + $1,500,000 phantom{text{assets =}} &+ $250,000 = $516,750,000 text{Liabilities} =& $20,000,000 + $5,000,000 + $35,000 phantom{text{Liabilities} =} &+ $15,000 = $25,050,000 text{NAVPS} =& frac{ $516,750,000 – $25,050,000 }{ 7,500,000 } =& frac{ $491,700,000 }{ 7,500,000 } = $65.56 end{aligned } financial assets=fortune =liabilities=liabilities=NAVPS== $500,000,000+$15,000,000+$1,500,000+ $250,000=$516,750,000 $20,000,000+$5,000,000+$35,000+ $15,000=$25,050,000 7,500,000$516,750,000−$25,050,000 7,500,000$491,700,000=$65.56
For mutual funds and ETFs, the NAVPS is often readily available on sites like Morningstar. As noted below, ETFs may differ in market price and NAVPS. For example, on February 22, 2019, the market price of the SPDR S&P 500 ETF is $279.14, while its Morningstar NAVPS is $279.18.
The difference between NAVPS and market price
For a mutual fund, the NAVPS is the price at which shares are bought and sold at the end of each trading day. Exchange-traded funds (ETFs) and closed-end funds differ in that they trade as stocks throughout the trading day. Because these types of funds are subject to market forces, their NAVPS may differ from the funds’ actual buying and selling prices at any time.
NAVPS for ETFs and closed-end funds are calculated at the end of the trading day for reporting purposes, but are updated several times a minute in real-time throughout the trading day.
Restrictions on Use of Net Asset Value per Share – NAVPS
In the financial statements of publicly traded companies, the NAVPS, or book value per share, is typically less than the market price per share. Historical cost of ownership, which tends to underestimate certain assets, and market supply and demand forces generally push stock prices above book value per share.
Find out more about Net Asset Value per Share – NAVPS
For related insights, read more about the difference between an ETF’s NAVPS and the market price.
