Return on Net Operating Assets (RNOA)
factor.formula
Return on Operating Assets (RNOA):
This formula calculates RNOA. The numerator is the company's operating profit (TTM) for the most recent 12 months, reflecting the profitability of the company's core business; the denominator is the average net operating assets, representing the company's average capital investment used to support operating activities.
Average net operating assets:
The calculation of average net operating assets uses the average of the net operating assets at the beginning and end of the period, which more accurately reflects the average level of the company's operating assets during the reporting period. Using the average can reduce the deviation caused by asset fluctuations at different time points and provide a more stable basis for calculating RNOA.
Operating Profit:
The calculation of operating profit is to remove the impact of financial activities and non-recurring items and focus on the profitability of the company's core operating activities. The specific calculation method is: subtract non-recurring gains and losses from net profit (including minority shareholders' gains and losses), and add the net financial expenses after deducting the impact of income tax (financial expenses minus net interest income). The income tax rate here should be the actual income tax rate of the enterprise, which is generally 25% as the default value, but the actual income tax rate of the enterprise should be used for calculation to improve accuracy.
Net operating assets:
Net operating assets represent the net investment capital used by a company in its operating activities. It is calculated by adding financial liabilities to total shareholders' equity (including minority interests) and subtracting financial assets. Equivalently, it can also be calculated by subtracting operating liabilities from operating assets. These two methods are essentially the same, but the understanding angles are slightly different. This indicator reflects the scale of capital invested by the company in its core business operations.
Formula Description:
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Refers to the total net profit attributable to the parent company's shareholders and minority shareholders for the current period.
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Refers to incidental gains and losses that are not directly related to the company's normal business operations, such as asset disposal gains, government subsidies, etc., which should be excluded from net profit.
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Refers to the expenses incurred by an enterprise in raising funds needed for operation, such as interest expenses, exchange losses, etc.
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It refers to the net amount of interest income obtained by an enterprise through financial activities minus interest expenses, such as interest income obtained from holding financial assets.
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The income tax rate applicable to an enterprise is usually the enterprise’s actual income tax rate. If not disclosed, 25% can be used by default.
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Refers to the total amount of equity attributable to the parent company's shareholders and minority interests.
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Refers to debts incurred by an enterprise due to financing activities, such as short-term loans and bonds payable.
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Refers to financial instruments held by an enterprise for trading purposes or that can be used for financing, such as trading financial assets, available-for-sale financial assets, etc.
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Refers to the assets used by an enterprise in its daily business activities, such as inventory, accounts receivable, fixed assets, etc.
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Refers to the liabilities incurred by an enterprise in its daily business activities, such as accounts payable and employee salaries payable.
factor.explanation
Return on operating assets (RNOA) is a more detailed and professional profitability evaluation indicator. It divides the enterprise into two parts: operating activities and financial activities, and focuses on evaluating the profitability efficiency of the enterprise's core business. This indicator more clearly reflects the profit return that the enterprise can generate by relying on its own operating ability by eliminating non-operating assets and liabilities, as well as the impact of non-recurring gains and losses and financial leverage. The higher the RNOA, the higher the operating efficiency and profit quality of the enterprise. This indicator is more valuable than the traditional ROE in analyzing the long-term profitability and sustainable growth potential of the enterprise.