Want to calculate residual income? Enter your net operating income, minimum required return, and average operating assets, and our Residual Income Calculator will show you the residual income.
Residual Income Calculator
Residual Income Calculator
Component | Description |
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Net Operating Income (NOI) | The total income generated from operations after deducting operating expenses. |
Minimum Required Return | The minimum return required on the company’s investments. |
Average Operating Assets | The average amount of operating assets employed during the period. |
Residual Income (RI) | The income that remains after subtracting the minimum required return on operating assets from the net operating income. |
Formula | Residual Income = Net Operating Income – (Minimum Required Return × Average Operating Assets) |
Purpose | Used to measure the profitability of a company after accounting for the cost of capital, aiding in financial performance evaluation and decision-making. |