Concept introduction:
Residual income means income spare after reducing the minimum income of the company on assets invested.
Requirement-1:
To calculate:
ROI, Investment turnover, Profit margin and Residual Income.
Concept introduction:
Return on Investment (ROI): Return on investment means how much the company is earning on the asset invested by the company in their business. Return on investment is calculated by dividing the operating income of the company from total capital employed in the business. It is a measure to the check the profitability in the business.
Residual income means income spare after reducing the minimum income of the company on assets invested.
Requirement-2:
To calculate:
ROI and Residual Income in each scenario.
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Managerial Accounting
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