[Verse 1] Division managers hold the keys to assets and profits both Calculate their ROI by dividing what they've grown Net income over invested capital shows the rate Twenty percent return means twenty cents per dollar's fate [Chorus] ROI equals net income divided by investment base Residual income takes the hurdle rate's embrace Subtract the minimum required from profits earned Investment centers where performance can be learned [Verse 2] Asset turnover multiplies by profit margin clean DuPont analysis breaks the formula between Sales over assets times net income over sales Two levers pulling ROI when either one prevails [Chorus] ROI equals net income divided by investment base Residual income takes the hurdle rate's embrace Subtract the minimum required from profits earned Investment centers where performance can be learned [Bridge] Book value versus current cost affects the denominator Average balances smooth the peaks like a calculator Controllable assets only count what managers command Exclude the corporate allocations from their measured land [Verse 3] Residual income adds another lens to see Absolute dollars left after capital's fee Twelve percent hurdle rate times assets deployed Remaining profit shows real value employees enjoyed [Chorus] ROI equals net income divided by investment base Residual income takes the hurdle rate's embrace Subtract the minimum required from profits earned Investment centers where performance can be learned [Outro] Capital efficiency measured at the highest tier Investment center metrics make performance crystal clear
← Profit Centers and Revenue Responsibility | Performance Measurement →