- Return On Net Assets:
- What does Return on Net Assets mean?
- The RONA formula is to add together fixed assets and net working capital, and divide into net after-tax profits. It is best to eliminate unusual items from the calculation, if they are one-time events that can skew the results.
Return on Net Assets = Net profit ÷ (Fixed assets + Net working capital)
Ms. Lisa has net income of $2,000,000, with extraordinary expense of $500,000. She also has fixed assets of $4,000,000 and net working capital of $1,000,000. After eliminating the extraordinary expenses, the net income figure is $2,500,000. Therefore, Return on Net Assets is-
$2,500,000 Net income ÷ ($4,000,000 Fixed assets + $1,000,000 Net working capital)
- = 50% Return on net assets
- Jun 11, 2018
- Tool Launched