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29 June 2022

ROE Vs RNOA | Difference | Comparison

Equity is finance refers to a shareholder interest or claim on a company's assets following the payment of all of its liabilities. The interest on the company's assets that are distributed among all common stockholders is known as shareholders equity or stockholders equity. The equity of shareholders can be calculated in two different ways. ROE measure the equity held by shareholders on the common share of the company. On the other hand, RNOA measures a company's ability to generate profit from each share of the equity. It figures out how much a business makes for every dollar it invests. Let us debate the ROE Vs RNOA and understand more about it. 

What is ROE?

Return on equity is referred to as ROE. It is a statistic used to evaluate a company's profitability in proportion to equity. It is the amount of net income of a company expressed as a percentage of its shareholder's equity. ROE measures how much profit a company generates as compared to its shareholder's equity. Thus, the higher the ROE means the company is generating more profit for its shareholders. 

ROE = Net Income / Equity of Shareholder

What is RONA?

RONA stands for Return on Net Operating Assets. It measures a company's ability to generate profit from each share of quit. It figures out how much a business makes for every dollar it invests. The RONA of a corporation is calculated by dividing its income before taxes by its total assets. It is also referred to as a profitability ratio and provides owners with a sense of how their business is doing in relation to its objectives, rivals and the industry at large. 

RNOA = Profit After Taxes / Net Operating System

ROE Vs RNOA | Difference  between ROE vs RNOA:

  • RONA stands for return on net operating while ROE stands for Return on Equity.
  • The formula for RONA is net income divided by total assets, whereas the formula for ROE  is net income after taxes divided by shareholder equity.
  • The RONA is calculated before taxes while the ROE is calculated after taxes.
  • The ROE calculation subtracts all obligations and proffered dividends from all assets while the RONA Calculations does not.
  • RONA  is a poor instrument for assessing how well a company performs in comparison to other businesses in the same industry as it, whereas ROE is.
  • While RONA is a useful internal management measure, investors should consider ROE is a good indicator of how well their money is being used to increase profits.


The RONA ratio provides an important indication of company efficiency without relying on financial investment. The shareholders can examine how the business uses its operational assets in relation to net income. To distinguish between the net financial assets and the net operating assets, though, may require specialist knowledge. Still, if you have any questions or queries in your mind Difference between ROE and RNOA then please ask us in the comment section below. 

Explore more information:

  1. EBIT vs Revenue
  2. EBIT Vs Operating Income
  3. ROE Vs ROCE
  4. ROI Vs ROE 
  6. NPV Vs ROI
  7. IRR Vs ROI
  8. EBIT Vs Net Income

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