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How to Calculate NCAV Properly: Adjustments, Pitfalls and Sources

NCAV is one subtraction, but the answer depends on which lines you take, from which balance sheet, and what you do about claims that sit outside total liabilities. This is the method we use, the adjustments worth making by hand, and what the current list of net-nets says about the usual traps.

By Logan Jorgensen · Published · Updated · Guide · 10 min read

Contents (6)
  1. 01How do you calculate NCAV correctly?
  2. 02The formula and where each line comes from
  3. 03Adjustments that change the answer
  4. 04What the current net-net list shows about the pitfalls
  5. 05Where to source the figures
  6. 06Limitations of this method

How do you calculate NCAV correctly?

Take total current assets from the latest balance sheet and subtract every liability, current and long-term, then minority interest and preferred equity. Convert to one currency and compare with market capitalization. Then check what the formula misses: claims outside total liabilities, current assets that won't turn into cash, and a balance sheet that may be months old.

The formula and where each line comes from

NCAV = Total Current Assets − Total Liabilities − Minority Interest − Preferred Equity
  • Total current assets: the subtotal on the balance sheet, not a sum you build yourself. Cash, short-term investments, receivables, inventory and other current items.
  • Total liabilities: everything, including long-term debt, lease liabilities, pensions and deferred tax. Fixed assets are ignored, but long-term claims are not.
  • Minority (non-controlling) interest: the part of consolidated subsidiaries owned by others. Their share of the assets is not yours.
  • Preferred equity: ranks ahead of common shareholders, so it comes off too.

EveryNetNet uses the latest reported balance sheet, converts it to US dollars, and lists a company when 0 < P/NCAV ≤ 1, excluding market caps under $1 million and bankruptcy (.Q) tickers. The full rules are on the methodology page.

Adjustments that change the answer

The formula is mechanical. These are the items worth checking in the filing itself.

  • Off-balance-sheet claims. Guarantees, litigation, environmental clean-up and purchase commitments sit in the notes, not in total liabilities. A large one can wipe out the discount.
  • Receivables and inventory quality. Old receivables and slow, seasonal or obsolete inventory rarely realise book value. Graham's stricter net-net working capital haircuts them (75% and 50%) for this reason.
  • Cash you can't reach. Cash held in subsidiaries in other countries, pledged as collateral, or held for customers (deposits, prepayments) may not be available to shareholders.
  • Balance-sheet date. A company that reports twice a year can be six months stale. Check whether cash has been spent since, and use the most recent interim report you can find.
  • Currency. NCAV and market cap must be in the same currency on the same date. A large move in the reporting currency changes the ratio without anything happening at the company.
  • Share count. Use shares outstanding after treasury stock, and look for convertibles, warrants or a recent issue that dilutes the per-share figure.
  • Assets the formula ignores. Land, buildings and long-term investment securities count for nothing in NCAV. That makes it conservative, but it also means NCAV says nothing about them either way.

What the current net-net list shows about the pitfalls

As of October 25, 2026, EveryNetNet lists 2,083 stocks trading at or below NCAV across 59 countries. These counts are computed from that list; they describe the group, not any one company.

  • Most are burning cash. Of the 2,044 with trailing free cash flow data, 1,106 (54%) had negative free cash flow over the last twelve months. A net-net that consumes cash is shrinking its NCAV every quarter.
  • Most are very small. 786 (38%) have a market cap under $10 million and 1,580 (76%) under $50 million; the median is $18.0 million. Expect thin trading, wide spreads and limited coverage.
  • Deep discounts are common, not rare. The median P/NCAV is 0.68, and 1,007 (48%) are at or below Graham's two-thirds level. A low ratio on its own does not single a company out.
  • Book value is far above price. The median price to tangible book is 0.40. That gap is usually a sign the market doubts the assets, which is exactly what the adjustments above are meant to test.

Where to source the figures

  • United States: 10-K and 10-Q filings on SEC EDGAR.
  • Japan: annual and semi-annual securities reports on the FSA's EDINET, and earnings summaries on TDnet.
  • United Kingdom: accounts filed at Companies House and results announcements via the company's exchange.
  • Hong Kong: annual and interim reports on HKEXnews.

Use the primary filing for the adjustments: data vendors, including EveryNetNet, standardise line items and can't read the notes for you.

Limitations of this method

  • NCAV is an accounting figure. It is not a liquidation value, and a liquidation would cost money and time.
  • Standardised data can misclassify a line, especially for banks, insurers and holding companies, where "current" has little meaning.
  • The statistics above are a snapshot of one day's list and change daily. They are not a backtest and say nothing about future returns.
  • This guide is general information, not investment advice.