What is the net asset value and how is it determined?
According to the German Valuation Act (BewG), the net asset value is the sum of the so-called common values of the fixed assets of a company less the debts belonging to the business assets.
“Common value” is a term from tax law and therefore means the market value of an asset.
The net asset value of a company is thus arrived at by determining the substance, i.e. the assets of a company.
For this purpose, the assets (i.e. the real estate, the machines, the commercial and technical equipment, the patents, the financial assets etc. etc.) are valued individually at their market value and added together. Debts and provisions are deducted from this.
While the net asset value assumes that the company will continue as a going concern, the liquidation value, as a special case of the net asset value, assumes that the company will be broken up.
In business valuation, the net asset value thus provides information on the cost of restoring the business.
Our glossary (only in German) informs you about the most important terms used in valuation practice.