What Is Residual Income and How Is It Computed? Is

question 4

Essay

What is residual income and how is it computed? Is it better for residual income to be high or low?
Residual income (RI) is another alternative return on investment (ROI) that can be used to measure a segment's performance. It is the amount of income earned in excess of a predetermined minimum rate of return on assets.

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Definitions:

Economic Policy

Strategies and actions taken by the government or regulatory bodies to influence the economy, including fiscal, monetary, and trade policies.

Societal Goal

A long-term objective that benefits the larger community, aiming at improvements in social well-being, economic prosperity, and environmental sustainability.

Microeconomic Statement

An assertion or observation that pertains to the individual units of the economy, such as households or businesses, rather than the economy as a whole.

Real Domestic Output

The total value of all goods and services produced within a country's borders adjusted for inflation.