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Return on net assets

Return on net assets

Description

Return on net assets is a ratio, very familiar to ROA but not quite as popular. RONA can be described as a ratio that can be used to evaluate company’s strength. Data to calculate this ratio is collected from the balance sheet (assets) and income statement (income). Main difference between ROA and RONA is a letter “N” that means that while calculating RONA, we use net assets instead of total assets (fixed assets + net working capital).

Norms and limitations

There are no fixed standards for RONA.

Although the higher value of the ratio the better the income performance. That means that the company is using net assets efficiently.

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