NCAV is the company’s current assets minus its total liabilities. This gives an additional margin of safety versus book value - on this valuation measure, one is essentially paying nothing for all the fixed assets (buildings, machinery, etc), or any goodwill items that may exist.
Benjamin Graham's thinking behind the net current asset value, was that he wanted to know what a company would be worth in a liquidation. NCAV values only current assets and ignores all fixed or intangible assets (buildings, machinery, goodwill etc), assuming they would be worth nothing in a liquidation scenario.
Graham showed that if he could buy companies trading at a value of less than their NCAV, he would essentially be getting a huge margin of safety. This is because the fixed and intangible assets were essentially thrown in for free, and there is a good chance they are not worthless.
We provide a 'Liquidation Value' in the margin of safety section of the Stock Report that indicates the discount/premium to NCAV.
| Ticker | Name | NCAV | StockRank™ |
|---|---|---|---|
| LON:BTRW | Barratt Redrow | 6040.50 | 68 |
| LON:MOH | MOH Nippon | 5322.73 | 20 |
| LON:TW. | Taylor Wimpey | 4272.70 | 79 |
| LON:BWY | Bellway | 3420.20 | 65 |
| LON:BKG | Berkeley group | 3034.80 | 75 |