Return on Net Assets (RONA) is a measure of profitability that compares the net income of a company to its net assets. The ratio is calculated by taking the total net income of the business over a period of time - usually a quarter or a full financial year - and dividing it by the average of net assets for the same period. The net assets of a company can include both available cash and the value of all its long-term investments and fixed assets, such as property, furniture and fixtures, and leave out other intangible items.

RONA, sometimes referred to as Return on Capital Employed (ROCE), is a key measure used by investors to gauge the efficiency and profitability of a business. While the ratio can provide an overall picture of a company’s profitability, it is important to look further into each component of the calculation - return and assets - to properly assess the performance of the business.

Generally speaking, the higher the RONA, the more effectively the company is using its assets to generate returns. A company with a higher RONA than its competitors indicates it has better management of its assets. A good way to normalize RONA for comparison purposes is to adjust for non-recurring items and special one-time transactions. This makes it easier to compare a company over time or between different companies and to identify trends caused by operational changes or other factors.

Simply put, RONA is a useful tool to uncover and measure how well a company is performing when it comes to generating and keeping profits while utilizing the assets it has. By comparing the RONA of a company with other organizations in the same industry, businesses can gain valuable insight as to how they should manage their own operations to maximize profits. This can be especially useful for small businesses, which often have fewer resources to work with.