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 = 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

References

  1. ^ "Innovation outposts and the evolution of corporate R&D". The Berkeley Blog. 2015-12-22. Retrieved 2018-01-19.
  2. ^ "Report Highlights Financial Resilience of Small and Mid-Sized Private Institutions". The Council of Independent Colleges. Retrieved 2018-01-19.
  3. ^ Return on Net Assets (RONA)
  4. ^ root (2003-11-26). "Return On Net Assets - RONA". Investopedia. Retrieved 2016-10-10.
  5. ^ "Intro and Financial Analysis". www.ualr.edu. Retrieved 2018-01-19.
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