#valuation | Noutez

Discounting translates future money into a present value

Discounting asks what a future payment is worth today at a specified rate. At a 10% annual discount rate, ₹110 received one year from now has a present value of ₹100. This is the reverse of growing ₹100 to ₹110, and the chosen rate is an assumption rather than a universal constant.

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funds

A pooled fund divides its net assets into units

Net asset value, or NAV, is a fund's assets minus its liabilities, divided by its outstanding units. If net assets are ₹10 lakh and there are 1 lakh units, NAV is ₹10. A lower NAV alone does not make one fund cheaper or more attractive than another because unit counts differ.

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equity

Market capitalisation is a price multiplied by a share count

Market capitalisation measures a company's equity value at the current share price. If it has 10 lakh outstanding shares trading at ₹50 each, its market capitalisation is ₹5 crore. This is not the cash the company holds, its annual revenue or the value of all its assets.

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