Case study: Return on net assets trend ranking
Product DetailsExecutive summary: This article examines how a distribution company developed an effective system (after a few years of false starts) to focus branches and frontline employees on the key factors to improve profitability.
One of my distribution chain clients has evolved an in-house return-on-net-assets (RONA) trend ranking report for their 30+ branch managers and three regional managers that has sparked real, positive changes. Here's the history of what has happened so far:
Their RONA formula? All managers in this company get paid on the financial components that go into measuring RONA. This chain's particular flavor of the formula starts with the numerator being the operating profit before interest and taxes (PBIT). But corporate allocation expense is deducted ...