Guide to Analysing Companies

Negotiable instrument
A financial instrument that can be handed from one
owner to another without informing the original issuer; for
example, a bank note, a bearer bond or, indeed, a cheque.
A cheque may be made non-negotiable by writing the words
“not negotiable” between the two lines across it.
Net
The amount remaining after making all the relevant deductions
from the gross amount (such as the cost of sales in the case of
profits). In investment, this means the difference between the
proceeds from the sale of a security and the cost of acquisition.
Used as a verb, it has also come to mean the process of, say,
netting losses against gains to arrive at a final taxable amount.
 Net sales. Total sales less amounts given as discounts
and amounts coming from goods returned.
 Net profit. Gross income less all costs (interest
payments, general expenses and tax).
 Net worth. Total assets less outstanding liabilities. A
company with a negative net worth is technically
insolvent, although it may still be able to carry on
trading.
N
NET
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Net asset value
There are two main meanings.
1 The market value of a unit in a unit trust or mutual
fund. Most funds calculate the net asset value (nav) at the
close of trading each day by adding the market value of all the
securities owned, plus any other assets (such as cash on
deposit), and dividing by the total number of units outstand-
ing. Since open-ended unit trusts or mutual funds issue or
redeem new units according to demand, this figure may vary
from day to day. With unit trusts or mutual funds that carry no
load (that is, charge no upfront fee), the nav and offer price for
each unit is usually the same.