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Net Asset Value Meaning And Definition
Net identifiable assets, in the context of M&A, refers to the fair value of the acquisition target’s assets once related liabilities have been deducted.
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Net identifiable assets (NIA) are defined as the total value of a company’s assets minus the value of its liabilities.
Identifiable assets and liabilities are those that can be identified with a definite value at a specific point in time (and with quantifiable future benefits/losses).
More specifically, the NIA metric represents the book value of the assets associated with the acquired company once liabilities have been deducted.
The value of the target’s assets and liabilities is determined at fair value after acquisition, with the net amount deducted from the purchase price and the residual value recorded as goodwill on the balance sheet.
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The premium paid above the value of the target’s NIA is captured by a goodwill line item on the balance sheet (eg premium on purchase price).
The value of the goodwill recognized on the acquirer’s books remains constant unless the goodwill is deemed impaired (ie the buyer has overpaid for the asset).
Goodwill is not an “identifiable” asset and is only recorded on the balance sheet post-acquisition so that the accounting equation remains true—ie. Assets = Liabilities + Equity.
In an asset acquisition, the target’s net assets are adjusted for both book and tax purposes, while in a stock acquisition, the net assets are written down for book purposes only.
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The fair market value (FMV) of the target’s net identifiable assets at the date of acquisition is $180 million.
Since the FMV of the target’s NIA was greater than its book value (ie, $200 million vs. $180 million), the acquirer paid $20 million of goodwill.
$20 million is recorded on the acquirer’s balance sheet because the acquisition price exceeds the value of the net identifiable assets.
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Net asset value, or NAV, is a mutual fund’s share price, which is the fund’s assets minus its liabilities, divided by the number of shares outstanding.
Unlike ETFs, many mutual funds offer more than one class of shares. This format allows you to choose the common category that best fits your time horizon.
When you hold a mutual fund outside of a retirement account, investors are subject to taxes on annual gains, even if you don’t sell — or, in some cases, just buy — your shares. Hence it is important to understand the tax efficiency of mutual funds. Here are some things to look for: The Ultimate Guide to Debt and Leverage Senior Debt Subordinated DebtBank Debt vs. Corporate Bonds Corporate Bank Financing Bonds Payable Mezzanine Financing Bond Light Loan Syndicated Loan Bridge Loan Zero Coupon Bond BySet (H-Coupon Bond) (HbS)
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Loan Schedule Mandatory Loan Amortization Cash Sweep Pay-in-Kind Interest (PIK) Interest Tax Shield Bullet Loan Floating Interest Rate Fixed Interest Rate Principal Issue Discount (OID) Secured Overnight Fund Rate (SOFR) Permanent Interest Annuity Accrual
Fixed Income Corporate Bond Active Vs. Passive Investments Mutual Funds Exchange Traded Funds (ETFs) Expense Ratios Municipal Bonds Commercial Paper Net Asset Value (NAV) Treasuries Inflation Protected Securities (TIPS) Treasury Strips
Credit Analysis Leverage Ratio Interest Coverage Ratio Debt-to-Equity Ratio Debt-to-Equity Ratio (D/E) Net Debt Time Interest Earning Ratio (TIE) Cash Flow Available for Debt Service (CFADS) Debt Service Coverage Ratio (Capvenantscdbt) Debt Covenants RLGFix-Beared Debt Covenants Ratio (FCCR) Capitalization Ratio Debt to Asset Ratio Degree of Total Leverage (DTL) Financial Leverage (DFL)
Bond Yield Coupon Rate Yield to Maturity (YTM) Current Yield to Call (YTC) Yield to Worst (YTW) Yield Curve Callable Bonds Make Full Call Provision Annual Percentage Rate (APR) Annual Percentage Yield (APY)
Net Asset Value (nav): Formula And Calculator (step By Step)
Net Asset Value (NAV) estimates the market value of an investment fund i.e. mutual fund and is equal to the total value of assets held minus the total liabilities.
Net asset value (NAV) is commonly seen in the context of mutual funds, as this measure serves as the basis for determining the mutual fund’s share price.
NAV on a per-unit basis represents the price at which units (ie, ownership shares) in a mutual fund can be bought or redeemed, which is usually done at the end of each trading day.
A mutual fund’s NAV is a function of the market value of all the securities in its portfolio.
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However, as with the valuation of individual public stocks, a mutual fund’s past performance is not necessarily indicative of future performance.
Additionally, the mutual fund’s objective, risk/return profile and time horizon should match the investor’s criteria, rather than valuing the funds solely on their NAV.
Since NAV is usually expressed on a unit price basis, i.e. per share, NAV should be divided by the total number of units outstanding.
Formula Net Asset Value (NAV) = Fund Assets – Fund Liabilities Net Asset Value (NAV) per unit = (Fund Assets – Fund Liabilities) ÷ Number of Units Best Mutual Fund NAV Calculation Example
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For example, if a mutual fund’s total holdings are worth $100 million with liabilities of $20 million, the fund’s NAV equals $80 million.
Now that we have subtracted the fund’s debt (liability) from the value of the fund’s ownership (assets), the next step is to divide by the total number of units outstanding.
Assuming 2 million units outstanding in the mutual fund, the NAV per share comes to $40.00.
For example, the NAV of an Exchange Traded Fund (ETF) is based on its underlying securities, while the ETF market value is based on supply/demand in the market.
Net Identifiable Assets: Formula And Calculation (step By Step)
So far we have discussed Net Asset Value (NAV) in the context of mutual funds, but another
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