The excess of divisional income from operations over a minimum amount of divisional income from operations is termed:
A) profit margin
B) residual income
C) rate of return on investment
D) gross profit

Question

Quizplus · Accepted Answer

The excess of divisional income from operations over a minimum amount of divisional income from operations is called residual income. This represents the amount of income that remains after a company has paid all its expenses, including taxes and the cost of capital, and is a valuable tool for evaluating divisional performance. Profit margin refers to the percentage of net income relative to revenue, while the rate of return on investment measures the profitability of an investment. Gross profit represents revenue minus the cost of goods sold.

The Excess of Divisional Income from Operations Over a Minimum