Return on Net Assets (RONA)

Return on Assets (RONA) shows the profit that managers are making as a percentage of the assets given them to manage.

Return on Net Assets Ratio calculation: Operating Income as a percentage of Net Assets

where Net Assets = Total Assets less (Payables and Other Current Liabilities)

Example: The Round Number Company

Operating Income = 48; Total Assets = 300; Payables = 20, Other Current Liabilities = 8

Return on Net Assets = 48/(300 - 20 - 8) = 48/272 = 18%

Companies using Return on Net Assets (RONA) rather than Return on Assets (ROA) are likely to use Net Asset Turnover rather than Asset Turnover.

“What do you mean by that?”

There are multiple definitions for ‘Net Assets’. Check which definition is being used. See discussion at Net Assets.

Also known as Return On Capital Employed (ROCE).

See also Return On Assets (ROA).

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