What is Residual Income?
In this glossary, Residual Income refers to: A performance metric representing net income minus a charge for the opportunity cost of capital employed; widely used in valuation, corporate performance measurement, and incentive compensation design.
How is Residual Income used in finance?
In finance communication, this term appears in contexts such as: "Residual income motivates managers to pursue projects that earn returns above the company’s cost of capital, aligning interests with shareholders."
Why does Residual Income matter in finance?
Residual Income matters because it supports clear communication in Analysis contexts for Financial Analysts, Bankers, and Traders. It also connects to aviation training and exam language such as CFA, ACCA, and FRM.
Who uses Residual Income?
Residual Income is mainly used by Financial Analysts, Bankers, and Traders.
What category does Residual Income belong to?
In this glossary, Residual Income is grouped under Analysis. Related pages in this category explain adjacent procedures, commands and operational concepts.
Where does this definition come from?
This definition is sourced from CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework and published by Protermify Finance as a static finance reference page.
