Managerial Accounting: "Chapter 11, Section 5: Using Residual Income (RI) to Evaluate Performance"

A further evaluative metric that Games Inc. can use is residual income. 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.