Unrestricted Net Assets

Categories: Accounting

Feels like something a fisherman should have, right?

When people give money to charity, they can designate specific uses. You donate $10 million to a hospital. However, you stipulate that they can only use the money to build a clinic dedicated to helping people grow longer, fuller ear hair. Those funds are called "permanently restricted" net assets. For the rest of time, they can only be used for your ear hair clinic.

On the other end of the spectrum is unrestricted net assets. These donations can be used however the non-profit deems fit.

A rival rich person donates money to the hospital. They want to show you up, so they give $11 million and say the hospital can use the money any way they want. The assets' use is unrestricted.

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Finance: What is Net Asset Value (NAV)?5 Views

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finance a la shmoop what is net asset value or nav nav is how mutual fund

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shares are valued or priced at the end of each trading day take a look at this

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mutual fund right here it has fourteen hundred seventy shares of Google and [mutual funds document]

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three hundred shares of Amazon and five hundred shares of IBM and while you get

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the idea at the end of each day the ask prices in

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the bid-ask spread ie the ask is the price at which somebody will sell these

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shares are added up and yep totaled in this case there are a hundred fourteen

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different names in the portfolio and seven million bucks in cash all of which

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total eighty-two point three million dollars in value at the end of this day

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well there are two million shares outstanding exactly at this moment so

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the nav at today's close well it's eighty two point three million divided

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by two million shares outstanding to get forty one dollars fifteen cents per

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share that 4115 is the nav of the mutual fund and what happens when more

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investors join by you know putting in cash well like let's say somebody

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invests a million dollars at the end of today well then the fund goes from [money lining up in rows]

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having seven million bucks in cash to having eight million bucks in cash and

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that investor just bought 1 million / 4115 4 nav share self that mutual fund

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company printed out of thin air an incremental twenty four thousand

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three hundred one shares bringing its total the two million twenty four

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thousand three hundred one the total value of the fund is now eighty three

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point three million bucks up from yesterday's eighty two point three

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million and the shares outstanding in the fund are now two million twenty four

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thousand three hundred one and yeah the nav didn't change just the shares

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outstanding and it's nav not not pronounced nav although it'd be kind of

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a cool name for a mutual fund anything never like find where you're going nav [tiny red car on map]

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