What is Return on Net Assets (RONA)?
RONA measures how efficiently a company converts its net assets into operating profit. It shows the profit generated per dollar of net assets invested in the business.
What is a good RONA percentage?
RONA above 15% is considered excellent, 10-15% is good, 5-10% is average, and below 5% is poor. The ideal RONA varies by industry and business model.
How is RONA calculated?
RONA = (Net Income / Net Assets) * 100, where Net Assets = Total Assets - Current Liabilities - Non-Interest Bearing Liabilities.
What's the difference between RONA and ROA?
ROA divides net income by total assets, while RONA divides net income by net assets (excluding liabilities). RONA provides a more focused view of productive asset usage.
Can RONA be negative?
Yes, RONA can be negative if a company has a net loss or negative net assets. A negative RONA indicates the company is not efficiently generating profit from its assets.