Formulas Flashcards
1
Q
RESIDUAL INCOME FORMULA FOR DETERMINING THE RETURN PART THAT YOU SUBTRACT AS IN OPERATING INCOME - REQUIRED RETURN ON
A
AVERAGE TOTAL ASSET * TARGET ROR
2
Q
ROI IS __________ INCOME AND RESIDUAL IS ____________ INCOME
A
NET INCOME
OPERATING INCOME
3
Q
Residual Income
A
OI - (AverageAssets * Required Rate of Return)
4
Q
ROI is a $ or Percentage
A
Percentage
5
Q
RI is a dollar or Percentage
A
Dollar
6
Q
ROI is before or after taxes
A
Before taxes but before you take out interest
7
Q
ROI
A
NOPAT/AVERAGE ASSETS