Residual Income

Residual income is the amount of money that a company or individual has left after all of its expenses have been paid. It is often used as a measure of a company's profitability and financial health.

There are two main types of residual income: operating residual income and net residual income. Operating residual income is the amount of money that a company has left after paying all of its operating expenses, such as rent, salaries, and utilities. Net residual income is the amount of money that a company has left after paying all of its expenses, including taxes.

Residual income is important because it provides a measure of a company's ability to generate cash flow. A company with a high level of residual income is more likely to be able to pay its debts and make investments in its business.

There are a number of ways to increase residual income. One way is to increase sales. Another way is to reduce costs. A third way is to invest in assets that generate cash flow.

Residual income is a valuable tool for businesses and individuals. It can be used to measure a company's profitability and financial health, and it can also be used to identify ways to increase cash flow.