Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
7 Cards in this Set
- Front
- Back
|
Residual Income
|
The net operating income that an investment center earns above the minimum required return on its operating assets.
(Garrison, Ray H.. Managerial Accounting, 12th Edition. Irwin/McGraw-Hill, 022007. 12.10) |
|
|
Return on Investment (ROI)
|
Net operating income divided by average operating assets. It also equals margin multiplied by turnover.
(Garrison, Ray H.. Managerial Accounting, 12th Edition. Irwin/McGraw-Hill, 022007. 12.10) |
|
|
ROI Formula
|
Net Operating Income / Average Operating Assets
NOI / AOA = ROI |
|
|
Margin
|
Operating Income / Sales
OI / Sales = Margin |
|
|
Turnover
|
Sales / Average Operating Assets
Sales / AOA = Turnover |
|
|
ROI Formula using Margin and Turnover
|
Margin x Turnover = ROI
OI / Sales x Sales / AOA = ROI |
|
|
Residual Income Formula
|
Current Income - Minimum Required Income
CI - MRI = RI |
