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Residual Income Calculator
Calculate residual income — the profit remaining after accounting for the true cost of the equity capital used to generate it.
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What is residual income?
Residual income measures the profit a company generates above and beyond the minimum return required by its equity investors, capturing true economic value creation rather than just accounting profit.
The formula
Residual Income = Net Income − (Cost of Equity × Equity Capital). A positive residual income means the company earned more than its investors’ required return; a negative figure means it fell short, even if net income itself was positive.
This calculator is for general financial-analysis education.
Last reviewed August 2026