What isreturn on net assets?

Return on net assets (RONA) is a ratio that measures a company’s financial performance. It determines how much net income a company’s generating from its assets. Investors use it to benchmark a business against its competitors and to assess efficiency.

Where have you heard aboutreturn on net assets?

As an investor it’s likely you’ll have heard of return on net assets when discussing investment opportunities and a business’ overall financial health.

What you need to know aboutreturn on net assets.

The ratio is designed to tell you how much income each pound’s worth of fixed assets (including net working capital), has generated for a specific period of time.

Return on net assets is calculated by dividing net income by fixed assets and net working capital.

The higher the ratio, the better the company is performing. If the return on net assets is increasing over time, it indicates that performance and profitability is also growing.