Decoding RONA: Key Metrics and Interpretations PPT

This PPT slide, part of the 159-slide Strategy Frameworks Manual PowerPoint presentation, provides a detailed breakdown of RONA (Return on Net Assets) and its components, emphasizing how this metric can be dissected into its fundamental elements. It illustrates the relationships between Return on Sales, Net Asset Turnover, and PBIT (Profit Before Interest and Taxes). The left section outlines the formulae that connect these elements, indicating that RONA can be expressed as a product of Return on Sales and Net Asset Turnover.

Net Asset Turnover is defined as the frequency with which a company’s capital is converted into sales revenue over a specific period. This metric is crucial for understanding how effectively a business utilizes its assets to generate revenue. The slide suggests that the turnover can be further analyzed through a pyramid of ratios, which can reveal underlying issues affecting asset turnover. For instance, poor management of debtors or cash and overinvestment in plant and machinery are highlighted as potential factors that could hinder performance.

The right section of the slide delves into the specifics of asset turnover, breaking it down into categories such as Sales/Working Capital and Sales/Fixed Assets. This segmentation allows for a more granular analysis of how different asset classes contribute to overall turnover. The slide also notes that metrics can include various constituents of the asset base, providing flexibility in measurement.

Overall, the content is designed to equip executives with a framework for interpreting RONA charts, enabling them to identify areas for improvement in asset utilization and operational efficiency. Understanding these metrics can lead to informed decision-making and strategic adjustments.

This slide is part of the Strategy Frameworks Manual PowerPoint presentation.

Download the Full Presentation

EXPLORE MORE SLIDES FROM THIS PRESENTATION

EXPLORE MORE PRESENTATIONS ON

Strategy Frameworks Sales

Are you familiar with Flevy? We are you shortcut to immediate value.

Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations

Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.

Flevy is the world's largest knowledge base of best practices.

Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.

Read Customer Testimonials

"FlevyPro provides business frameworks from many of the global giants in management consulting that allow you to provide best in class solutions for your clients."

– David Harris, Managing Director at Futures Strategy

"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."

– Michael Evans, Managing Director at Newport LLC

"I am extremely grateful for the proactiveness and eagerness to help and I would gladly recommend the Flevy team if you are looking for data and toolkits to help you work through business solutions."

– Trevor Booth, Partner, Fast Forward Consulting

"As a young consulting firm, requests for input from clients vary and it's sometimes impossible to provide expert solutions across a broad spectrum of requirements. That was before I discovered Flevy.com.

Through subscription to this invaluable site of a plethora of topics that are key and crucial to consulting, I

... [read more]

– Nishi Singh, Strategist and MD at NSP Consultants

"Last Sunday morning, I was diligently working on an important presentation for a client and found myself in need of additional content and suitable templates for various types of graphics. Flevy.com proved to be a treasure trove for both content and design at a reasonable price, considering the time I

... [read more]

– M. E., Chief Commercial Officer, International Logistics Service Provider

"As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value."

– David Coloma, Consulting Area Manager at Cynertia Consulting

"Flevy.com has proven to be an invaluable resource library to our Independent Management Consultancy, supporting and enabling us to better serve our enterprise clients.

The value derived from our [FlevyPro] subscription in terms of the business it has helped to gain far exceeds the investment made, making a subscription a no-brainer for any growing consultancy – or in-house strategy team."

– Dean Carlton, Chief Transformation Officer, Global Village Transformations Pty Ltd.

"As a consultant requiring up to date and professional material that will be of value and use to my clients, I find Flevy a very reliable resource.

The variety and quality of material available through Flevy offers a very useful and commanding source for information. Using Flevy saves me time, enhances my expertise and ends up being a good decision."

– Dennis Gershowitz, Principal at DG Associates