ECONOMICS

Detailed explanation-1: -Residual income in this case may be used to assess the performance of a capital investment, a team, a department, or a business unit. The calculation of residual income is as follows: Residual income = operating income-(minimum required return x operating assets).

Detailed explanation-2: -Residual income is calculated as net operating income minus the product of average operating assets times the minimum required rate of return: Essentially RI measures the dollar amount of profits in excess of a required rate of return (commonly referred to as capital charge which is usually set my management).

Detailed explanation-3: -Residual income is the income an individual has left after all personal debts and expenses are paid in personal finance. Residual income is the level used to help figure out the creditworthiness of a potential borrower.