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Return on net assets

From Wikipedia, the free encyclopedia

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The return on net assets (RONA) is a measure of financial performance of a company which takes the use of assets into account.^[1]^[2] Higher RONA means that the company is using its assets and working capital efficiently and effectively.^[3] RONA is used by investors to determine how well management is utilizing assets.^[4]

Basic formulae

Return on net assets = .mw-parser-output .sfrac{white-space:nowrap}.mw-parser-output .sfrac.tion,.mw-parser-output .sfrac .tion{display:inline-block;vertical-align:-0.5em;font-size:85%;text-align:center}.mw-parser-output .sfrac .num{display:block;line-height:1em;margin:0.0em 0.1em;border-bottom:1px solid}.mw-parser-output .sfrac .den{display:block;line-height:1em;margin:0.1em 0.1em}.mw-parser-output .sr-only{border:0;clip:rect(0,0,0,0);clip-path:polygon(0px 0px,0px 0px,0px 0px);height:1px;margin:-1px;overflow:hidden;padding:0;position:absolute;width:1px}⁠net income/ (Fixed assets) + (working capital)⁠

where

Working capital = (current assets) - (current liabilities)

^[5]

In a manufacturing sector, this is also calculated as:

Return on net assets = ⁠ (plant revenue) - costs / (net assets) ⁠

See also

Financial ratio

References

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