what does rona tell you 
the return on net assets rona ratio compares a firm s net income with its assets and helps investors to determine how well the company is generating profit from its assets the higher a firm s earnings relative to its assets the more effectively the company is deploying those assets rona is an especially important metric for capital intensive companies which have fixed assets as their major asset component in the capital intensive manufacturing sector rona can also be calculated as return on net assets plant revenue costs net assets text return on net assets frac text plant revenue text costs text net assets return on net assets net assetsplant revenue costs the higher the return on net assets the better the profit performance of the company a higher rona means the company is using its assets and working capital efficiently and effectively although no single calculation tells the whole story of a company s performance 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 longer term 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 provides 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 ronaassume a company has revenue of 1 billion and total expenses including taxes of 800 million giving it a 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 in the denominator when calculating rona dividing the net income of 200 million by 1 billion yields a return on net assets of 20 for the company 