The amount of income left over after expenses are subtracted is called?

Residual income refers to the amount of income that remains after all expenses, debts, and other financial obligations have been accounted for. This concept is often utilized in both personal finance and corporate finance to assess the profitability of an investment. In a personal finance context, it can help individuals understand how much money they have available for discretionary spending or saving after meeting their essential expenses.

When assessing a borrower’s ability to repay mortgage loans, lenders often consider residual income as an important factor. It reflects the cash flow available to maintain a reasonable standard of living, thus demonstrating financial health beyond mere income reports.

The other choices represent different financial concepts. Debt ratio calculates the proportion of a borrower's total debt to total assets, which does not focus on the leftover income specifically. Discretionary spending refers to non-essential expenses that are made after covering necessities, rather than the net income after all expenses. Debt inverse is not a commonly recognized financial term, further differentiating it from discussions about leftover income after expenses.