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Actual for You - What's the Rave About RONA?
Lately, there have been a lot of heated discussions regarding link building. Is it ethical to create a link building campaign? Does Google or any other search engine penalize for “link farms” (a bunch of non-related links created for the SOLE purpose of increasing search engine rati
Careful consideration must be given when choosing and working with an outsource manufacturing partner. Although each situation is unique, there are common characteristics that make for a reliable outsource partner.One company that carefully analyzed the determining factors of
RONA stands for Return On Net Assets. This equals the Net Operating Profit after tax divided by the sum of cash and working capital requirements plus fixed assets. It takes into consideration the assets a company uses to achieve its success.
RONA = Net Income divided by Fixed Assets + Net Working Capital
The higher the return, the better the profit performance for the company.
RONA Attributes:
• It can maximize value creation
• Increases corporate transparency
• Aligns managers interest with share holder/owners interest
• Improve internal strategic communication
• Establishes clear priorities
• Streamlines budgeting
WHY I AM NOT A BIG FAN of RONA
Several things keep me from being a big fan of RONA.
1. It can create a negative incentive for individual managers to avoid investing in growth. This is especially true when their bonus or incentive is tied to RONA. Branch managers, middle managers and other managers may make decisions based on RONA that are not in the best interest of the company’s long term growth
There are logical and essential realities taking place on the Internet highway "today".According to the CIA World Fact Book there is going to be over 2 billion people on the Internet by 2010. Today there are just about 1 billion. What took 20 years to get here will now take o
RONA = Net Income divided by Fixed Assets + Net Working Capital
The higher the return, the better the profit performance for the company.
RONA Attributes:
• It can maximize value creation
• Increases corporate transparency
• Aligns managers interest with share holder/owners interest
• Improve internal strategic communication
• Establishes clear priorities
• Streamlines budgeting
WHY I AM NOT A BIG FAN of RONA
Several things keep me from being a big fan of RONA.
1. It can create a negative incentive for individual managers to avoid investing in growth. This is especially true when their bonus or incentive is tied to RONA. Branch managers, middle managers and other managers may make decisions based on RONA that are not in the best interest of the company’s long term growth
There are many ways of accepting payments online, some are easier, some more expensive, and some which offer ways to take online payments, and pay affiliates without tracking them yourself.Accepting payments online can be a minefield and as the amount of online payment proces
The higher the return, the better the profit performance for the company.
RONA Attributes:
• It can maximize value creation
• Increases corporate transparency
• Aligns managers interest with share holder/owners interest
• Improve internal strategic communication
• Establishes clear priorities
• Streamlines budgeting
WHY I AM NOT A BIG FAN of RONA
Several things keep me from being a big fan of RONA.
1. It can create a negative incentive for individual managers to avoid investing in growth. This is especially true when their bonus or incentive is tied to RONA. Branch managers, middle managers and other managers may make decisions based on RONA that are not in the best interest of the company’s long term growth
One of the largest corporate scandals was Refco collapse. Investigations of it started in two months after it had happened. The main person that made this collapse possible, Bernett, was arrested for giving false information to the investors, commerce between states. Trading of Refc
• Improve internal strategic communication
• Establishes clear priorities
• Streamlines budgeting
WHY I AM NOT A BIG FAN of RONA
Several things keep me from being a big fan of RONA.
1. It can create a negative incentive for individual managers to avoid investing in growth. This is especially true when their bonus or incentive is tied to RONA. Branch managers, middle managers and other managers may make decisions based on RONA that are not in the best interest of the company’s long term growth
Small business owners sometimes make common mistakes when just starting out, and trying to get paid. Some small business owners depend on that income more than someone who gets a check each week. This is because when you work for yourself, the work and therefore the payments are s
2. It is an all embracing process that often requires a culture change. This almost always requires consulting assistance. (Good for our business)
3. It can seem complex to middle management. Actually for most of management that are not trained in finance.
4. Requires diligent, explicit CEO and Board support
5. Specific RONA value based management training is essential
By the way---- just for the record --- the perfect value based management system has yet to be invented or discovered. All methodologies have their drawbacks.
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