What is 'Return On Net Assets  RONA'
Return on net assets (RONA) is a measure of financial performance calculated as net income divided by fixed assets and net working capital. RONA can be used to discern how well a company is performing versus others in its industry. 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.
BREAKING DOWN 'Return On Net Assets  RONA'
Net income is revenue less expenses associated with making or selling the company's products; operating expenses such as management salaries and utilities; interest expenses associated with debt; and all other expenses. Fixed assets are tangible property used in production, such as real estate and machinery, and do not include goodwill or other intangible assets carried on the balance sheet. Net working capital is calculated by taking the company's current assets minus its current liabilities. It is important to note that longterm liabilities are not subtracted in the denominator when calculating return on net assets.Interpreting Return on Net Assets
The higher the return on net assets, the better the profit performance of the company. Individually, no single calculation tells the whole story of a company's performance, and return on net assets is just one of many ratios used to evaluate a company's financial health.
If the purpose of performing the calculation is to generate a longerterm perspective of the company's ability to create value, extraordinary expenses may be added back into the net income figure. For example, if a company had a net income of $10 million but incurred an extraordinary expense of $1 million, the net income figure could be adjusted upward to $11 million. This adjustment does not accurately reflect the company's return on net assets in that year but might provide an indication of the return on net assets the company could expect in the following year if it does not have to incur any further extraordinary expenses.
Example of Return on Net Assets
A company has revenue of $1 billion and total expenses including taxes of $800 million, giving it net income of $200 million. The company has current assets of $400 million and current liabilities of $200 million, giving it net working capital of $200 million. Further, the company's fixed assets amount to $800 million. Adding fixed assets to net working capital yields $1 billion for the denominator when calculating return on net assets. Dividing the net income of $200 million by $1 billion yields a return on net assets of 20% for the company.

Net Tangible Assets
Calculated as the total assets of a company, minus any intangible ... 
Tangible Net Worth
A measure of the physical worth of a company, which does not ... 
Return
The gain or loss of a security in a particular period. The return ... 
Net Interest Income
The difference between the revenue that is generated from a bank's ... 
Cash Return On Assets Ratio
A ratio used to compare a businesses performance among other ... 
Average Return
The simple mathematical average of a series of returns generated ...

Investing
Calculating Return on Net Assets
Return on net assets measures a companyâ€™s financial performance. 
Managing Wealth
Explaining Net Tangible Assets
Net tangible assets is a companyâ€™s total assets subtracting both intangible assets (such as goodwill and intellectual property) and total liabilities. 
Managing Wealth
How to Calculate Your Tangible Net Worth
Your net worth can be calculated with a simple equation. 
Investing
What is Net Margin?
The ratio of net profits to revenues for a company that shows how much of each dollar earned by the company is translated into profits. 
Investing
Profit Metrics: Gross, Operating & Net Profits
In addition to net profit, most analysts look at a companyâ€™s gross profit and operating profit to gauge performance. 
Investing
Is Net Income The Same As Profit?
Net income and profit both deal with positive cash flow, but there are important differences between the two concepts. 
Investing
What is Net Worth?
Net worth is the amount by which assets exceed liabilities. Another way to say this is, it's the value of everything you own, minus all your debts. 
Investing
Explaining Tangible Net Worth
Tangible net worth is determined by taking total assets, then subtracting liabilities and intangible assets. 
Personal Finance
What's Your Net Worth Telling You?
Net worth provides a road map for retirement  learn if you're headed in the right direction.

How are net tangible assets calculated?
Learn about net tangible assets, what it measures and how to calculate a company net tangible assets using examples. Read Answer >> 
Why is the amount of net tangible assets an important benchmark?
Find out more about net tangible assets, how to calculate net tangible assets and the importance of net tangible assets and ... Read Answer >> 
How can I find net margin by looking a company's financial statements?
Learn how to calculate a company's net margin using financial statements by dividing the company's net revenues by its net ... Read Answer >> 
What is the fixed asset turnover ratio and why is it important?
Learn about the fixed asset turnover ratio and how this calculation is used to analyze how efficiently a company uses its ... Read Answer >> 
What is the difference between shareholder equity and net tangible assets?
Find out more about shareholders' equity, net tangible assets, how to calculate these balance sheet items and the difference ... Read Answer >> 
What is being adjusted in "adjusted net income"?
Understand the difference between net income and adjusted net income, including which items factor into the adjustment and ... Read Answer >>