What is net current asset value? Net Current Asset Value

Net Current Asset Value, or NCAV in English, is a financial indicator that measures the ability of a listed company to generate income from current assets. Net current asset value and net working capital come from the Net-Net investment strategy proposed by Benjamin Graham. Graham believes that the income generated by a company's current assets can show the true value of a company, so the net current asset value is the company's current assets minus total liabilities. If the company establishes preferred shares, because the preferred shares are contractually binding, the preferred shares are also counted as debt when calculating ordinary shareholder income, that is, the value of the net current assets is the company's current assets minus the preferred shares minus total liabilities. The Net-Net investment strategy values a company's stock using Net Liquid Asset Value per Share (NCAV Per Share) to find the cheapest stocks of high-quality company stock. However, in the calculation of the value of net current assets, since only current assets and total liabilities are used, data such as long-term assets are not considered, so there are still certain limitations in its use.