Residual Income Explained

Residual income refers to income exceeding expectations due to activities. It's crucial for planning and resource allocation. Used in finance, equity valuation, and personal finance, it involves calculating the difference between controllable margin and operating assets, multiplied by the required rate of return. In equity valuation, it's net income minus equity charge. Residual income indicates value received beyond expectations.

What does controllable margin represent in the context of residual income?

In equity valuation, how is residual income determined?