Help, I have a question for Finance assignment: How is the net asset value to the share price related? Thx ;-)

Question

Help, I have a question for Finance assignment: How is the net asset value to the share price related? Thx ;-)

Answer 1

Usually a company would be making profit from its assets therfore you could check its return on capital ratio of the past. However an investment company would be actually making money from the asset value. An investment company would trade at a discount or premium to asset value. Usually it would be at a discount, as it would cost money to realise the cash from the investments. The size of the discount varies according to which way the value of the assets is perceived to be going. If the asset value was looking to fall the discount would increase and vice versa.

Answer 2

They are both business valuation methods. Net asset can be used where a coy is not publicly quoted to know its worth while share price is used mainly for pulicly quoted coys.