How to Calculate Residual Income

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.
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[@FeliciaLoprete]

Best explanation I have found. Thanks!

[@ileardgz7691]

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[@nickvargas6176]

This was really helpful.THANKS!!

[@polyeesther08]

Very simple and straight to the point. Great work!💯

[@akwes64]

Why don't u start your videos with the meaning of the term (residual income) we r trying to find.

[@sandeepaditya7918]

he gives a one line definition of the topic on the screen