Hence, a company can be judged as being more profitable either by adding income to the numerator, or by reducing the assets in the denominator. Driving the numerator up is harder, because it entails selling more products. Driving the denominator down is often easier—because you can just opt to outsource. The higher the ratio, the more efficient a business is judged to be in using its capital. Asus’s proposal made sense. If Dell could outsource some of its assets but still be able to sell its customers the same products, then it would improve its RONA, making Wall Street happy.
Return of net assets 2
