Definition
RONA measures profitability relative to assets actually used in operations. It focuses on operating assets by using fixed assets plus net working capital, excluding excess cash and non-operating assets. Useful for evaluating operational efficiency.
Formula
RONA = Net Income / (Fixed Assets + Net Working Capital) × 100%
Example
Net income of $20M with $100M fixed assets and $30M net working capital gives RONA of 15.4%. This shows operating efficiency without distortion from excess cash.
FAQ
What is Return on Net Assets (RONA)?
Net income relative to fixed assets and net working capital.
How do you calculate Return on Net Assets (RONA)?
A common formula for Return on Net Assets (RONA) is: RONA = Net Income / (Fixed Assets + Net Working Capital) × 100%
Why is Return on Net Assets (RONA) important?
Return on Net Assets (RONA) helps investors evaluate profitability and make more informed decisions.