(CMA)The segment operating margin less imputed (estimated)interest on the assets used by the investment centre is known as:
A)Return on investment
B)Residual income
C)Operating income
D)Return on assets

Question

Quizplus · Accepted Answer

Residual income is calculated by deducting the imputed (estimated) interest on the assets used by the investment center from the segment operating margin. It provides a measure of the actual amount of income earned by the investment center over and above the cost of the assets used to generate that income. Return on investment (ROI) is calculated by dividing the segment operating income by the average operating assets employed in the investment center, whereas return on assets (ROA) is calculated by dividing the net income by the total assets of the company. Operating Income is the income earned from the day-to-day operations of the investment center.

(CMA)The Segment Operating Margin Less Imputed (Estimated)interest on the Assets