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The return on net assets ( RONA) is a measure of financial performance of a company which takes the use of assets into account. [1] [2] Higher RONA means that the company is using its assets and working capital efficiently and effectively. [3] RONA is used by investors to determine how well management is utilizing assets.
Return on assets. The return on assets ( ROA) shows the percentage of how profitable a company's assets are in generating revenue . ROA can be computed as below: [ 1] The phrase return on average assets (ROAA) is also used, to emphasize that average assets are used in the above formula. [ 2]
DuPont analysis (also known as the DuPont identity, DuPont equation, DuPont framework, DuPont model, DuPont method or DuPont system) is a tool used in financial analysis, where return on equity (ROE) is separated into its component parts. Useful in several contexts, this "decomposition" of ROE allows financial managers to focus on the key ...
Return on equity (ROE) and return on assets (ROA) determine how efficient a company can be at generating profits. Both formulas that can help investors determine how good a company is at turning a ...
The strength of a company isn’t just about how much money it makes. Investors also want to know how efficiently a company uses its assets, over a set period of time, based on its size and ...
Return on investment. Return on investment ( ROI) or return on costs ( ROC) is the ratio between net income (over a period) and investment (costs resulting from an investment of some resources at a point in time). A high ROI means the investment's gains compare favourably to its cost. As a performance measure, ROI is used to evaluate the ...
ROIC = NOPAT / Average Invested Capital There are three main components of this measurement that are worth noting: [2] While ratios such as return on equity and return on assets use net income as the numerator, ROIC uses net operating income after tax (NOPAT), which means that after-tax expenses (income) from financing activities are added back to (deducted from) net income.
It is commonly represented as total assets less current liabilities (or fixed assets plus working capital requirement). [2] ROCE uses the reported (period end) capital numbers; if one instead uses the average of the opening and closing capital for the period, one obtains return on average capital employed (ROACE).