The three metrics at a glance
- NCAV (net current asset value): Current assets - total liabilities. Extreme conservatism; ignores noncurrent assets.
- NTAV (net tangible asset value): Total assets - intangibles - total liabilities. Includes PP&E but drops goodwill/patents.
- Book value: Total assets - total liabilities. Keeps intangibles; most lenient of the three.
When to use each
- NCAV: Distressed, cash-box, or liquidatable situations; microcaps with questionable earnings.
- NTAV: Capital-heavy businesses where PP&E has resale value (shipping, REIT-like, certain industrials).
- Book value: Stable franchises where intangibles are meaningful (brands, software) and balance sheet is clean.
Discount rules of thumb
- NCAV: Pay <= two-thirds of NCAV after haircuts.
- NTAV: Demand at least a 25-40 percent discount to NTAV, bigger if assets are specialized.
- Book: Use only with quality screens; seek a discount if returns on equity are volatile.
Haircut guidance
- Intangibles: zero in NCAV/NTAV; keep only if contract-backed.
- PP&E: resale-based; 0-70 percent depending on asset fungibility.
- Inventory and receivables: apply the liquidity-trap haircuts before computing NCAV.
How to screen
- Start with NCAV for net-net hunting.
- Layer NTAV for asset-heavy names that fail NCAV but still carry tangible backing.
- Use book value only with profitability and stability filters to avoid value traps.
Internal links and tools
- Balance-sheet events: Shares outstanding changes
- Volume tell: Interesting volume events
- Price pressure: Near-lows scanner
- Sentiment: Short interest changes
- More reading: Resources hub
Compliance note
This guide is educational and not investment advice. Do your own research or consult a professional adviser.