Answer: Return on Net Operating Assets = 13.55%
Step-by-step explanation:
return on net operating profits is calculated by dividing operating profits after tax by net operating assets. this ratio measures a company's performance with regards to how well a company uses its operating assets to generate profits. it is a good measure of a company's profitability. the return on net operating profits is used by investors to determine how much each dollar invested in operating assets will earn and also it indicates a companies efficiency.
RONA = Return on net Operating Assets
operating profits = 48032000
average net operating assets = 354414000
RONA = Operating profits/average operating assets
RONA = 48032000 / 354414000 = 0.13552512 = 13.55%
The return on net operating asset is 13.55% meaning a dollar invested in operating assets earns 13.55% return.
A company should measure its RONA ratio against RONA of companies in the same industry and also measure RONA ratio against the industry's RONA to determine whether or not the company is using its operating assets efficiently in generating earnings.