Residual income is calculated as
A)operating income - (ROI ´ average operating assets).
B)operating income/(ROI ´ average operating assets).
C)operating income/(minimum rate of return ´ average operating assets).
D)operating income - (minimum rate of return ´ average operating assets).
E)(minimum rate of return ´ average operating assets)/operating income.

Question

Quizplus · Accepted Answer

Residual income is calculated by taking the operating income and subtracting the minimum rate of return multiplied by the average operating assets. This is because residual income is the excess income earned above the minimum required return on a company's assets.

Residual Income Is Calculated as