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Taylor Armond
on Nov 12, 2024

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If divisional income from operations is $75,000, invested assets are $737,500, and the minimum return on invested assets is 6%, the residual income is $36,750.

Minimum Return

The lowest acceptable return on an investment, set by an investor or implied by a financial model or market expectation.

Residual Income

The amount of net income an entity generates beyond its required rate of return on its investments.

Invested Assets

Assets that a company or individual allocates resources toward with the expectation of generating a future benefit or income.

  • Acknowledge the theory of residual income as a performance evaluation tool and the steps involved in its calculation.
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Guadalupe HernandezNov 14, 2024
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