Asked by

Shaine Santillan
on Nov 12, 2024

verifed

Verified

Suppose a manager's performance is to be measured by residual income. Which of the following will not result in an increase in the residual income figure for this manager, assuming other factors remain constant?

A) An increase in sales.
B) A decrease in operating assets.
C) A decrease in expenses.
D) An increase in the minimum required rate of return.

Residual Income

Income that continues to be generated after the initial effort has been expended, often used in the context of investments or intellectual property.

Minimum Required Rate of Return

The lowest acceptable return on an investment, determined by an investor's risk tolerance and other factors, used as a benchmark for evaluating potential investments.

Operating Assets

Cash, accounts receivable, inventory, plant and equipment, and all other assets held for operating purposes.

  • Grasp the implications of adjustments in sales, expenses, and assets on the metrics of financial success.
  • Determine the advantages and disadvantages associated with employing residual income for performance evaluation.
verifed

Verified Answer

JR
Jaileen ReyesNov 12, 2024
Final Answer:
Get Full Answer