Residual income

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Residual income (RI) is accounting measure of income minus a dollar amount for required return on an accounting measure of investment.

Definitions

According to Cost Accounting by Horngren, Datar, Rajan (14th edition),

Residual income (RI). Accounting measure of income minus a dollar amount for required return on an accounting measure of investment.

According to Managerial Accounting by Braun, Tietz (5th edition),

Residual income (RI). Operating income minus the minimum acceptable operating income given the size of the division's assets.

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