Editing Net asset value (section)

==Businesses==
Turning to operating companies as opposed to investment companies (mutual funds), in determining whether shares in a [[public company]] are a cheap or expensive [[investment]], one tool used by investors is a comparison of the company's current [[market capitalization]] (being the price at which the market values the company) with its NAV. The NAV may be below the market price for the following reasons:

* Accounting principles and bases of presentation of amounts in [[financial statement]]s differ worldwide, blurring the comparability of companies in various jurisdictions.  Financial statement values are typically recorded based on their local jurisdiction's related principles of accounting, which affect all the remaining points below.
* The current value of a company's assets likely differ from the historical cost reflected in the financial statements used in NAV calculations.
* The NAV describes the company's current asset and liability position. Investors might believe that the company has significant growth prospects, in which case they would be prepared to pay more for the company than its NAV.
* Certain assets, such as [[Goodwill (accounting)|goodwill]] (which broadly represents a company's ability to make future profits), are not necessarily included on a [[balance sheet]] and so will not appear in an NAV calculation.

A company's market value will not always be greater than its NAV. For example, analysts and management estimated that [[Liberty Media Corporation]] was trading for 30-50% below its net asset value (or "core asset value") in June 2007.{{Citation needed|date=June 2007}} Where a company's market value is lower than its NAV, it may be considered more profitable to wind the company down and sell off its assets individually rather than continue to run it as a [[going concern]].

In contrast to fund valuation, the assets of a company will generally be valued for the purpose of a NAV calculation using the [[book value]], the [[historical cost]], or the [[amortization (accounting)|amortised]] cost of the company's assets, or an appropriate combination of the three.