Return on Net Assets Calculator
Calculate return on net operating assets
RONA Formulas
Understanding RONA
Return on Net Assets (RONA) measures how efficiently a company generates profit from its net operating assets—fixed assets plus working capital. Unlike ROA, RONA focuses on operating assets and excludes cash and non-operating assets.
RONA is particularly useful for capital-intensive businesses where managing both fixed assets and working capital is critical. It shows how much profit each dollar of net operating assets generates.
A higher RONA indicates better asset utilization. Companies can improve RONA by increasing profits, reducing fixed asset needs through efficiency, or optimizing working capital management.
RONA vs Other Return Metrics
RONA
Return on fixed assets + working capital. Operating focus.
ROA
Return on total assets including cash. Broader measure.
ROE
Return on shareholder equity. Affected by leverage.
ROIC
Return on invested capital. Includes debt and equity.
RONA Benchmarks
| Industry | Typical RONA | Good RONA | Notes |
|---|---|---|---|
| Manufacturing | 8-15% | >15% | High fixed assets |
| Retail | 12-20% | >18% | Inventory-intensive |
| Technology | 15-30% | >25% | Asset-light |
| Utilities | 5-10% | >8% | Capital-intensive |
| Services | 20-40% | >30% | Low fixed assets |
Improving RONA
Increase Profitability
Higher margins directly improve RONA. Focus on pricing and cost control.
Optimize Fixed Assets
Improve asset utilization. Sell or redeploy underperforming assets.
Manage Working Capital
Reduce inventory days, collect receivables faster, extend payables appropriately.
Track by Business Unit
RONA at the business unit level reveals which operations use capital most efficiently.
Frequently Asked Questions
Why exclude cash from net assets?
Cash isn't an operating asset—it's financial. Including excess cash would dilute RONA and not reflect operating efficiency. RONA focuses on assets needed to run the business.
Should I use EBIT or Net Income?
EBIT for comparing operations across companies (removes financing effects). Net Income for actual shareholder returns. Both are valid; be consistent when comparing.
How does RONA relate to EVA?
Economic Value Added (EVA) builds on RONA: EVA = (RONA - Cost of Capital) × Net Assets. Positive spread means value creation; negative means value destruction.
What causes low RONA?
Low margins, excess fixed assets, or poor working capital management. Analyze the DuPont decomposition: RONA = Profit Margin × Asset Turnover. Fix the weaker component.
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