Return on Net Assets (RONA)
What is Return on Net Assets (RONA)
Return on net assets (RONA) is a financial ratio that measures the profitability of a company's net assets. It is calculated by dividing the company's net income by its net assets and expressing the result as a percentage.
Net income is a company's profit from its normal business operations, after deducting operating expenses and taxes. Net assets are a company's total assets minus its total liabilities.
RONA is used to evaluate the efficiency and effectiveness of a company's use of its net assets to generate profits. A high RONA indicates that the company is generating a good return on its net assets, while a low RONA may indicate that the company's net assets are not being used effectively.
RONA can be a useful metric for comparing the performance of different companies within the same industry, as it allows investors to see which companies are generating the highest returns on their net assets. It can also be useful for comparing the performance of a company over time, as it shows whether the company is becoming more or less efficient at generating profits from its net assets.