Return on net worth

Return on Net Worth – By Prof. Simply Simple ,[object Object],[object Object],[object Object],[object Object]

Return on Net Worth (RONW) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Example… ,[object Object],[object Object],[object Object],[object Object]

Therefore… ,[object Object],[object Object],[object Object],[object Object]

Difference between Return on Capital Employed (ROCE) and Return on Net Worth (RONW)

Example of ROCE… ,[object Object],[object Object],[object Object],[object Object]

So, therefore as an investor you are likely to feel encouraged to invest in A rather than B

But, RONW says… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

To sum it up… ,[object Object],[object Object],[object Object]

So…. ROCE is an appropriate measure to get an idea of the overall profitability of the company's operations while RONW is an appropriate measure for judging the returns that a shareholder gets on his investment Hence successful investors like Warren Buffet assign more importance to a company’s RONW to understand their investment growth potential

Hope you have now understood the concept of RONW In case of any query please email to hmasurkar@tataamc.com

Return on net worth

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