The calculation for this KPI is very similar to Return on Funds Employed excepting that it uses the value of Net Worth as opposed to the total value of Funds Employed.
Example:
A) Net Profit Before Interest = R508,327 B) Net Worth = R847,213 C) Return On Net worth = 59.8% (A ÷ B X 100)
Discussion:
This figure can in some cases be very misleading as it is based on the value of Net Worth, therefore it is the trend of this KPI that is of most value to you.
The danger of too much reliance upon this KPI is that if your value of Net Worth decreases, this percentage figure could be showing an increasing trend.
You should use this information in accordance with your Equity percentage together with your Return on Funds Employed percentage to arrive at a meaningful conclusion.