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Definition – What is Return on Net Assets (RONA)?
Return on Net Assets (RONA) is a ratio of net income to net assets. It is listed as a percentage.
Formula – How to calculate RONA
Return on Net Assets = (Net Income / (Fixed Assets + Net Working Capital) x 100%
Example
A business has net income of $2,100, fixed assets of $8,000, and net working capital of $3,000.
Return on Net Assets = ($2,100 / ($8,000 + $3,000)) x 100% = ($2,100 / $11,000) x 100% = 0.1909 x 100% = 19.09%
Therefore, this company has a return on net assets of 19.09%.
Sources and more resources
- Houston Chronicle – Return on Net Assets Analysis – A short explanation of how to analyze RONA.
- Accounting Tools – Return on net assets – A short summary of return on net assets. Includes the formula as well as some sample calculations.
- Wikipedia – Return on Net Assets – A very short Wikipedia entry on RONA.
- Investopedia – Return on Net Assets – A description and example of return on net assets.