Question
11. Residual income is calculated as a. operating income (ROI average operating assets). b. operating income / (ROI average operating assets). c. operating income /
11. Residual income is calculated as a. operating income (ROI average operating assets). b. operating income / (ROI average operating assets). c. operating income / (minimum rate of return average operating assets). d. operating income (minimum rate of return average operating assets). e. (minimum rate of return average operating assets) / operating income. 12. The performance measure that uses after-tax operating income and the actual cost of capital employed is a. return on investment (ROI). b. residual income. c. economic value added (EVA). d. margin. e. turnover. 13. Which of the following is an absolute dollar measure rather than a percentage? a. average operating assets. b. operating income. c. residual income. d. economic value added (EVA). e. All of these. 14. Economic Value Added is residual income with the cost of capital equal to the firm's a. budgeted cost of capital. b. average cost of capital. c. standard cost of capital. d. actual cost of capital. 15. In calculating residual income, the variable set by top management is called the a. average operating assets. b. operating income. c. hurdle rate. d. actual operating assets.
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