Chapter 10, Problem 1AE

To determine

ROI: Return of Investment (ROI) measures the return from an investment. It shows how well the business is performing. It is usually calculated in percentage form.

Residual Income: Residual Income is the income left for a business after the minimum return required from the business is achieved. In other words, residual income is the income over and above the minimum required return.

To calculate: ROI and Residual Income of a company and to find out the reason for an increase in ROI and residual income with a decrease in the average operating assets.