Net Current Asset Value Per Share (NCAVPS): A Deep Dive for Australian Investors

While most investors flock to well-known valuation metrics like price-to-earnings (P/E) or price-to-book (P/B), there’s a quietly powerful tool that’s making a comeback in 2025: Net Current Asset Value Per Share (NCAVPS). Popularised by value investing legend Benjamin Graham, NCAVPS can help Australian investors identify shares trading below their liquidation value — a rare opportunity in today’s volatile markets.

What Is NCAVPS and Why Should You Care?

NCAVPS stands for Net Current Asset Value Per Share. It’s a conservative calculation that measures a company’s net current assets (current assets minus total liabilities) and divides that by the number of shares outstanding. The result? An estimate of what each share would be worth if the company sold off its current assets and paid off all liabilities — essentially, the minimum safety net for shareholders.

• NCAVPS Formula: (Current Assets – Total Liabilities) / Shares Outstanding
• Why it matters: If a company’s share price trades below its NCAVPS, the market may be undervaluing its assets, offering a potential bargain for value investors.

In 2025, as global economic uncertainty and rising rates put pressure on balance sheets, this metric is drawing renewed interest from savvy Australian investors searching for defensive plays and deep value opportunities.

NCAVPS in Action: Hunting for Hidden Value on the ASX

Let’s put NCAVPS into perspective with an Australian example. Suppose a small-cap ASX company, Aussie Widgets Ltd, reports the following in its FY2024/25 balance sheet:

• Current Assets: $50 million
• Total Liabilities: $35 million
• Shares Outstanding: 10 million

NCAVPS = ($50M – $35M) / 10M = $1.50 per share

If Aussie Widgets’ share price is trading at $1.10, that’s a 27% discount to its NCAVPS — suggesting the company may be undervalued or the market is overly pessimistic about its future. For investors willing to dig deeper, these types of situations can offer outsized returns if the business stabilises or asset values are realised.

In early 2025, several micro-cap mining and manufacturing stocks on the ASX have traded below their NCAVPS, largely due to sector-wide selloffs and recession fears. Historically, such periods have given patient investors a unique edge — but only if they’re disciplined and selective.

Limits, Pitfalls, and Policy Updates: What to Watch in 2025

NCAVPS is a blunt instrument — not a magic wand. It works best when:

• Current assets are liquid (cash, receivables, inventory with high turnover)
• Liabilities are fully accounted for (including off-balance-sheet obligations)
• The company isn’t burning cash at an unsustainable rate

Recent 2025 ASIC updates have tightened disclosure requirements for asset valuations, aiming to reduce the risk of “window dressing” on balance sheets. Investors should pay close attention to footnotes and auditor statements, particularly with companies in distressed sectors.

Other pitfalls include:

• Asset Quality: Not all current assets are equally valuable. Inventory may be obsolete, and receivables could be hard to collect.
• Business Viability: A low share price relative to NCAVPS can signal deeper problems — like unsustainable losses or poor management.
• Market Sentiment: Deep discounts to NCAVPS can persist for years, especially in illiquid or unloved sectors.

Using NCAVPS in Your 2025 Investment Strategy

NCAVPS shouldn’t replace your standard due diligence — but it can be a potent screening tool in the right hands. Here’s how Australian investors are leveraging it in 2025:

1. Screen for Bargains: Use NCAVPS to spot companies trading below their net current asset value, especially in sectors facing cyclical headwinds.
2. Dig Deeper: Review the quality of current assets and check for hidden liabilities or contingent risks.
3. Monitor Policy Changes: Stay updated on ASIC and ATO announcements that may impact asset reporting or company disclosures.
4. Blend with Other Metrics: Combine NCAVPS with P/E, debt ratios, and qualitative analysis for a more complete investment thesis.

In 2025’s uncertain landscape, NCAVPS offers a disciplined, value-driven way to identify shares with strong downside protection and potential upside — as long as you do the work and remain patient.