Residual income represents a management and control metric oriented towards the interests of business owners. Assuming consistent calculation, the signals from this management metric are compatible with the results of a company valuation based on cash flows. This study first outlines the advantages of residual income compared to "traditional" management metrics. It then presents several concepts of residual income and evaluates them from both theoretical and practical perspectives. Furthermore, the calculation of residual income is carried out with consideration of the German tax system. A practical example illustrates the approach and the informational value of residual income. Finally, implementation and management issues, as well as the use of residual income in controlling, are discussed.