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The Income/Outcome® Contextuarya visual glossary of corporate finance |
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We use "business visualization" to graphically simplify complex business concepts (and increase business acumen). To get more information on business visualization, please see "The Company Board" (our business results visualizer) and Income/Outcome (our customizable business simulation).
The following are our generic explanations of common corporate financial terminology. Actual meanings can vary wildly from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
To get more information about the authors, please see our Directory of Contributing Editors.
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Ratio: Operating Income as a percentage of the Net Assets
RONA shows the profit that managers are making as a percentage of the assets given them to manage. Net Assets in this sense means the amount of Assets derived from Equity and long-term debt. Net Assets does not include supplier Creditors and other liabilities which the managers have generated themselves. Similarly, Operating Income does not take into account the finance charges and taxes; i.e. the items that managers have no control over.
See also Return On Assets (ROA).