Return on Net Assets (RONA)

Posted in Finance, Accounting and Economics Terms, Total Reads: 945
Advertisements

Definition: Return on Net Assets (RONA)

Return on Net Assets is one of the profitability ratios. It shows us how much of the net income is generated from the net assets of a company. Net assets is the sum of the fixed assets and net working capital.

 

RONA     =             Net Income

                Fixed Assets + Net working Capital

 

Where Net Working Capital = Current Assets – Current Liabilities

Example:

For 2011, Company A has a net income of Rs 100 Crores. Fixed Asset which includes plant,  machinery and equipment of Rs 800 crores. Difference between Current Asset and Current Liability is 200 crore.

 

Net Working Capital  = 200 crores

RONA  =  100/(800 + 200)

          =  10 %

Search & Explore : Management Dictionary

Browse the definition and meaning of more terms similar to Return on Net Assets (RONA). The Management Dictionary covers over 7000 business concepts from 6 categories.

Advertisements



Share this Page on:

Similar Definitions from same Category: