Explain residual income and what residual income represent

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1. RESIDUAL INCOME. Explain residual income. What does residual income represent? What does residual income measure?

2. INTERPRETING RESIDUAL INCOME. If a firm's residual income for a particular year is positive, does that mean the firm was profitable? Explain. If a firm's residual income for a particular year is negative, does that mean the firm necessarily reported a loss on the income statement? Explain. What does it mean when a firm's residual income is zero?

Reference no: EM13902266

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