Which of the Following Statements About Residual Income Is

question 51

Multiple Choice

Which of the following statements about residual income is

• A) Residual income = Operating Income - Sales
• B) Residual income = Operating Income - Operating Assets
• C) Residual income is the amount of income in excess of a target or desired return on investment
• D) None of these.

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Definitions:

Treasury Stock

Shares that were issued and subsequently reacquired by the company, reducing the amount of outstanding stock on the open market.

Cash Dividends

Payments made by a corporation to its shareholder members from its profits or reserves.

Return on Equity

An indicator of a company's financial performance, indicating the amount of profit generated from the investments made by its shareholders.

Gross Profit Percentage

A financial metric that shows the portion of sales revenue that exceeds the cost of goods sold (COGS), expressed as a percentage of total sales revenue.