Residual Income EFFECT ON RETURN RECEIVED BY SHAREHOLDERS

Residual Income EFFECT ON RETURN RECEIVED
BY SHAREHOLDERS
The test results also show that residual income does not have
significant effect on returns received by shareholders.
Worse than EVA, more companies have residual income
negative compared to EVA. During the study period, in
each year, only about 7-12 companies that have
positive residual income. Viewed from the side of the company, just 5
company consistently posted positive residual income every
year, namely PT Multi Bintang Indonesia, PT Sari Husada, PT Kalbe Farma,
PT Merck Indonesia and PT Unilever Indonesia. The calculation results show
residual income even have a negative effect. To calculate residual
income, which is then used NOPAT less the capital charge.
NOPAT is derived from the statement of income, ie operating profit, calculated
after-tax income. Unlike the calculation of EVA, NOPAT and
capital charges here are not adjusted for certain accounting adjustments.
In many companies, accounting adjustments were not done
can cause distortion in the capital charge and NOPAT, including value
invested capital that tend to be overstated. This situation later resulted
residual income figures lower than EVA or even residual
negative income while a positive EVA. This often causes
a contradictory situation, with a negative residual income a company can
share dividends and share price increases.

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