How do you Calculate Return on Net worth?

Return on Net Worth (RONW) is calculated by dividing the net profit after tax by the average net worth (equity) of a company, and then multiplying by 100 to express it as a percentage. The formula is: RONW = (Net Profit After Tax / Average Net Worth) × 100. Average net worth is typically calculated by taking the sum of the net worth at the beginning and end of the period and dividing it by two. This metric helps assess how effectively a company is using its equity to generate profits.