The formula for RI (residual income) is:
A) operating income divided by average total assets.
B) operating income minus minimum acceptable operating income.
C) after-tax operating income minus the weighted average cost of capital times average total assets excluding current liabilities.
D) operating income divided by sales revenue.

Question

Quizplus · Accepted Answer

Residual income is calculated as operating income minus the minimum acceptable operating income, which is typically determined by multiplying the required rate of return by the average operating assets.

The Formula for RI (Residual Income) Is