Net Current Asset Value Per Share - NCAVPS


DEFINITION of 'Net Current Asset Value Per Share - NCAVPS'

A value created by professor Benjamin Graham in the mid-twentieth century to determine if a company was trading at a fair market price. NCAVPS is calculated by taking a company's current assets and subtracting the total liabilities, and then dividing the result by the total number of shares outstanding.

NCAVPS: (Current Assets- Total Liabilities)
# Shares Outstanding

BREAKING DOWN 'Net Current Asset Value Per Share - NCAVPS'

According to Graham, investors will benefit greatly if they invest in companies where the stock prices are no more than 67% of their NCAV per share. A study done by the State University of New York to prove the effectiveness of this strategy showed that from the period of 1970 to 1983 an investor could have earned an average return of 29.4%, by purchasing stocks that fulfilled Graham's requirement and holding them for one year.

However, Graham did make it clear that not all stocks chosen in this manner will have excessive returns, and that investors should also diversify their holdings when using this strategy.

  1. Current Assets

    A balance sheet account that represents the value of all assets ...
  2. Outstanding Shares

    A company's stock currently held by all its shareholders, including ...
  3. Asset Value Per Share

    The total value of a fund's investments divided by its number ...
  4. Value Investing

    The strategy of selecting stocks that trade for less than their ...
  5. Value Stock

    A stock that tends to trade at a lower price relative to it's ...
  6. Liability

    A company's legal debts or obligations that arise during the ...
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