Using Residual Income (RI) to Evaluate Performance
Residual income is another evaluative metric that Games Products Inc. can use. Residual income (RI) provides a measure of income that is available to the whole organization. A manager's goal is to increase her RI from year to year. Most organizations that use RI also use ROI. Using both measures has the benefit of comparing one division to another by using ROI and minimizes the conflict between company goals and division goals by using RI.