Which of the following would increase residual income?
A) Decrease in operating income
B) Decrease in operating assets
C) Increase in the required ROI
D) Decrease in margin

Question

Quizplus · Accepted Answer

Residual income is calculated as operating income minus the product of required rate of return and operating assets. Therefore, decreasing operating assets would increase residual income. A decrease in operating income or margin would actually decrease residual income. An increase in the required ROI would also decrease residual income.

Which of the Following Would Increase Residual Income