This video shows how to calculate Residual Income.
Residual Income is the profit earned (e.g., by a department) above and beyond the required rate of return. Residual Income is calculated as follows:
Residual Income = Income – (Required Rate of Return * Capital Invested)
Residual Income is frequently used to evaluate the performance of a division within a company. In such a case, the required rate of return would be set by the company’s top management. Assuming that a division posted income of $45,000 and used $200,000 of capital with a 10% required rate of return, the Residual Income of the division would be $5,000.
—
Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD.
Edspira’s mission is to make a high-quality business education accessible to all people.
—
SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS & OTHER FREE GUIDES
* http://eepurl.com/dIaa5z
—
MICHAEL’S STORY
* https://www.edspira.com/about/
—
LISTEN TO THE SCHEME PODCAST
* Apple Podcasts: https://podcasts.apple.com/us/podcast/scheme/id1522352725
* Spotify: https://open.spotify.com/show/4WaNTqVFxISHlgcSWNT1kc
* Website: https://www.edspira.com/podcast-2/
—
CONNECT WITH EDSPIRA
* Website: https://www.edspira.com
* Instagram: https://www.instagram.com/edspiradotcom
* LinkedIn: https://www.linkedin.com/company/edspira
* Facebook: https://www.facebook.com/Edspira
* Reddit: https://www.reddit.com/r/edspira
*TikTok: https://www.tiktok.com/@edspira
—
CONNECT WITH MICHAEL
* LinkedIn: https://www.linkedin.com/in/prof-michael-mclaughlin
* Twitter: https://www.twitter.com/Prof_McLaughlin
* Instagram: https://www.instagram.com/prof_mclaughlin
* Snapchat: https://www.snapchat.com/add/prof_mclaughlin
*TikTok: https://www.tiktok.com/@prof_mclaughlin
—
HIRE MCLAUGHLIN CPA
* Website: http://www.MichaelMcLaughlin.com/hire-me
Source
