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Return on Net Assets (RONA)

Gauge how productively net assets (fixed assets plus working capital) are being deployed to generate operating profit.

RONA Calculator

Net Income (After taxes)

Total Assets (Balance sheet)

Current Liabilities (Short-term debt)

Non-Interest Bearing Liabilities (Optional)

Enter Net Assets directly

Net Assets (Total Assets - Liabilities)

RONA Results

RONA Percentage

Net Assets

Asset Turnover

Performance Rating

Calculation Breakdown

Net Income:

Total Assets:

Current Liabilities:

Non-Interest Liabilities:

Net Assets:

Key Insights

• Excellent asset efficiency
• Good asset utilization
• Average performance
• Asset efficiency needs improvement
• Assets generate more than their value in income
• Assets generate less than their value in income

Understanding RONA

What is RONA?

Return on Net Assets (RONA) measures how efficiently a company uses its net assets to generate profits. It shows how much profit is generated for each dollar of net assets.

Formula

RONA = Net Income ÷ Net Assets × 100

Where Net Assets = Total Assets - Current Liabilities - Non-Interest Bearing Liabilities

Good RONA Values

• Above 15%: Excellent
• 10-15%: Good
• 5-10%: Average
• Below 5%: Poor

Key Benefits

• Measures asset efficiency
• Compares companies across industries
• Identifies operational improvements
• Evaluates management performance
• Guides investment decisions

Limitations

• Based on book values, not market values
• Can be manipulated by asset sales
• Doesn't consider risk factors
• May not reflect future performance
• Varies by industry and business model

Pro Tips

• Compare RONA with industry averages for better context
• Track RONA trends over multiple periods
• Use alongside other profitability ratios like ROA and ROE
• Consider the company's growth stage when evaluating RONA
• Look for consistency in RONA performance over time