Asset-Based Floor
Calculates net asset value — total assets minus total liabilities — as the minimum the business is worth regardless of future performance.
How it works
- 1
List all assets at realistic realisable value: land and building, plant and machinery, inventory, receivables and cash.
- 2
List all liabilities: secured and unsecured debt, creditors, statutory dues and provisions.
- 3
Subtract total liabilities from total assets. The result is net asset value (NAV).
- 4
Treat NAV as a floor, not a target. If an earnings-based method produces less than NAV, the business is worth more shut down and sold off than run.
Sample: a Gujarat textile processing unit
| Land and building | ₹14,00,00,000 |
| Plant and machinery (net) | ₹9,50,00,000 |
| Inventory | ₹4,20,00,000 |
| Receivables | ₹3,10,00,000 |
| Cash and bank | ₹1,20,00,000 |
| Term loan | ₹8,00,00,000 |
| Working capital facility | ₹3,40,00,000 |
| Creditors and statutory dues | ₹2,60,00,000 |
| Step | Formula | Result |
|---|---|---|
| Total assets | 14,00,00,000 + 9,50,00,000 + 4,20,00,000 + 3,10,00,000 + 1,20,00,000 | ₹32,00,00,000 |
| Total liabilities | 8,00,00,000 + 3,40,00,000 + 2,60,00,000 | ₹14,00,00,000 |
| Net asset value | 32,00,00,000 − 14,00,00,000 | ₹18,00,00,000 |
If the earnings-based methods for this unit produce ₹15 crore, the asset floor of ₹18 crore becomes the binding number — a buyer is effectively purchasing the land and machinery.
- Asset-heavy businesses: manufacturing, real estate, logistics, hospitality.
- Distressed, loss-making or winding-down situations.
- Establishing a defensible downside in a negotiation.
- Asset-light businesses — SaaS, services, agencies — where the balance sheet says almost nothing about value.
- Ignores brand, customer relationships, IP and team entirely.
- Book values often diverge sharply from realisable values, especially for older machinery and slow-moving inventory.
Valuenomic runs this method alongside five others and weights the results.