# What is NAV? How to increase the company’s NAV?

Currently, the demand for users to learn about stocks is increasing. Because of this, you cannot ignore the concept of stocks, one of which is the NAV index.

## What is NAV?

NAV is an index used to evaluate a company’s assets. NAV stands for Net Asset Value meaning net asset value index. With this index, investors can confirm the net asset value of the company and its shareholders. From there, recognizing whether the true nature inside the company is commensurate with the appearance of the outside.

Company capital is often provided by two main sources: equity capital from shareholders and loan capital. These capital sources create assets for the company, for example: Space, equipment, labor and other liquid assets.

So, if a company has a low charter capital (shareholder-contributed capital) but the assets shown to the outside are high, it may be due to the loan. The value of the company’s assets contributed by such shareholders is called the NAV or net asset value of the company.

## How to calculate the NAV – Calculate NAV formula

It is very simple to calculate the NAV. We take the total value of equity (including total assets minus debt and preferred bond securities) divided by the total number of shares issued. Investors will use this index to evaluate the nature of a company’s assets.

Formular:

NAV = Total value of equity / Total shares

## What is the meaning of the NAV?

Through NAV index, investors decide whether to invest stocks in the company or not, specifically in the following aspects:

• For example, if a company issues a share price of 100PHP and now NAV is 130, the company may have accumulated capital to create a new source of profits from the old source or from the development reserves. Therefore, investors can be completely assured when buying 130,000 shares because they still buy true to the company’s real value.
• If the company’s NAV is at 130PHP but brings very high value, investors can spend a larger amount of money to buy shares to increase profits and increase the value of NAV in the near future.
• If the company’s NAV is at 130PHP but is at a loss and the NAV can be reduced, this is really the time when investors have to use the head wisely. Must carefully and accurately analyze analysis to make the wisest decision. Remember, high returns are risky.

## How to increase the Company’s NAV

To pull the NAV in the market, you can apply the following methods

• First, you can buy back fund certificates in the market just like listed companies buy stocks.
• Second, you pay dividends above the 22% threshold.
• Finally, if the two above methods do not work, you can convert part or all to open funds.

## What is the difference between NAV and Shares?

You have understood what NAV is through the extremely detailed sharing above. So the question arises what is NAV compared to stocks

• As mentioned above, NAV is the net value or net worth of a company and the share price is the market value that investors are willing to spend money to buy to own shares of the company.
• The value of the stock will depend on the buyer and the supplier. It can be higher or lower than the NAV value of the stock depending on the effects of these two sources.

## Summary

So you have a clear understanding of what NAV is, right? Hope you are a smart investor who can make accurate investment decisions in the future.

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