Return on Net Assets (RONA) can be used to assess how well a company is performing compared to others in its Industry. RONA is a measure of Financial Performance calculated as net Income divided by the sum of fixed assets and net working Capital.It reveals if a company and its management are deploying assets in economically valuable ways or if the company is performing poorly versus its peers.
The return on net assets (RONA) is a comparison of net income with the net assets. This is a metric of financial performance of a company that takes into account Earnings of a company with regard to fixed assets and net working capital. The ratio shows how effectively and efficiently the company is using its assets to generate earnings.
It is an especially important metric for capital intensive companies which have fixed assets as their major components.
RONA can be calculated as:
Return on Net Assets = Net Income / (Fixed Assets + Net Working Capital)
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The RONA calculation is similar to that of the Return on Assets (ROA) metric. Unlike ROA, RONA takes a company’s associated liabilities into account.