Frequently Asked Questions
Net Current Asset Price (NCAV Valuation)
The Net Current Asset Price (NCAP) is an asset-based valuation created by Benjamin Graham, the father of value investing. It subtracts a company's Total Liabilities from its Current Assets to arrive at an overall valuation. This number is divided by the number of shares outstanding to arrive at the Net Current Asset Price.
Where a company is undervalued according to NCAP, the market is not putting any value on the business' ability to generate profits, only on its (semi-) liquid assets. This means it's deeply undervalued. It is very rare to find companies that are undervalued by it's NCAP, but ones that are should be looked into carefully. They can be great finds, but there may also be good reasons why the market has depressed the price so drastically.
Why is the Net Current Asset Price negative in some cases?
If a company's Total Liabilities are larger than the Current Assets, this valuation will produce a negative number. This is a reflection of the strength of a company's balance sheet.