Return on net assets
Encyclopedia
The return on net assets (RONA) is a measure of financial performance of a company which takes the use of assets into account.
= Profit after tax ( also known as net income
) / ( Fixed assets + working capital
)
In a manufacturing sector this is also calculated as:
Return on net assets = (plant revenue - costs) / net assets
Formula
Return on net assetsNet assets
Net assets, sometimes referred to as net worth, is the shareholders' equity = assets minus liabilities. The term net assets is commonly used with charities or not for profit entities -- a measurement of their ability to reinvest profits toward their mission....
= Profit after tax ( also known as net income
Net income
Net income is the residual income of a firm after adding total revenue and gains and subtracting all expenses and losses for the reporting period. Net income can be distributed among holders of common stock as a dividend or held by the firm as an addition to retained earnings...
) / ( Fixed assets + working capital
Working capital
Working capital is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Net working capital is...
)
In a manufacturing sector this is also calculated as:
Return on net assets = (plant revenue - costs) / net assets