Compute return on net operating assets and explain how the level of leverage interacts with it in helping determine which alternative management should pursue.

Return on net operating assets (RONOA) is a measure of how efficiently an organization is utilizing its assets to generate income. It is calculated by dividing the net operating income of a company by its total net operating assets and expressed as a percentage.

A higher RONOA indicates that the organization has used its assets more effectively to generate profits, whereas a lower ratio suggests that their current strategies are not producing desired results. The level of leverage can also play an important role in determining which alternative management should pursue since it affects the amount of risk associated with any potential investments or decisions made by the firm. Generally speaking, firms with high levels of debt will be subject to increased risk and potentially lower returns than those with little or no debt; thus, it can be beneficial for managers to consider these factors when making investment decisions so as to minimize their exposure to potential losses.