Net Asset Value (NAV)

The systematic allocation of a tangible asset's cost over its useful life. Depreciation reduces the book value of physical assets such as machinery, vehicles, and buildings on the balance sheet while recording the expense on the income statement.

The collective economic benefit created by the network of partners, developers, suppliers, and complementary businesses that surround a platform or company. Ecosystem value is an increasingly important intangible asset for technology firms, where the strength and breadth of the surrounding ecosystem drives adoption, innovation, and customer retention.

The present value of future profits from existing business, plus adjusted net asset value. Originally developed for insurance companies, the concept is increasingly applied to any business with long-duration revenue streams, subscription contracts, or intangible assets that generate predictable future cash flows.

The intangible premium that a business commands above the fair value of its net tangible assets, reflecting factors such as brand strength, regulatory licences, customer loyalty, and market position. Franchise value is a critical concept in financial services and regulated industries where the right to operate carries significant economic worth.

An intangible asset that meets the identifiability criteria under IFRS 3 or IAS 38, meaning it is either separable from the entity (can be sold, transferred, or licensed independently) or arises from contractual or legal rights. Identified intangible assets are recognised separately from goodwill in purchase price allocations.

A reduction in the carrying amount of an asset when its recoverable amount falls below that carrying amount. Under IAS 36, goodwill, indefinite-life intangibles and intangibles not yet available for use are tested every year, other assets only when there is an indication of impairment; under FRS 102 all assets, including goodwill, are tested only on indication.

An intangible asset for which there is no foreseeable limit to the period over which it is expected to generate net cash inflows for the entity. Under IAS 38 and ASC 350, indefinite-lived intangible assets are not amortised but must be tested for impairment at least annually and whenever there is an indication of impairment.

A visual and analytical framework that reconciles the difference between two valuations — typically entry and exit, or book value and market value — by attributing value changes to specific drivers such as revenue growth, margin improvement, multiple expansion, and intangible asset creation. Value bridges are widely used in private equity reporting and portfolio company management.

Return on Equity (ROE)

Net income divided by shareholders' equity, measuring the return generated on owners' invested capital.

What is the difference between tangible and intangible assets?

Tangible assets have physical form: land, buildings, machinery, vehicles and stock. Intangible assets have none: they are identifiable non-monetary assets such as patents, trade marks, software and customer contracts.