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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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What is residual income? What is EVA? How does EVA differ from the general definition of residual income?

To determine

Define the terms residual income and EVA. Also, describe how these are different in general definitions.

Explanation

Residual Income:

Residual income can be determined by deducting the minimum dollar return on the operating assets of the company from the amount of operating income.

Economic Value Added (EVA):

Economic value added can be evaluated by deducting the dollar amount of capital employed from the operating income after tax...

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