Investment Center Performance: Residual Income and EVA

The video tutorial explores three key metrics for assessing investment centers: Return on Investment (ROI), Residual Income, and Economic Value Added (EVA). It begins by defining an investment center as a responsibility center focused on generating returns. ROI is calculated by dividing operating income by operating assets. Residual income is the surplus income over expected returns, while EVA measures the value added beyond the cost of capital, considering both debt and equity. These metrics help evaluate the performance of investment centers within an organization.

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