Separately identifiable parts of the business operations of a company or group whose activities, assets, risks, and returns can be clearly identified. Companies are obliged to disclose in their annual report and accounts certain financial information relating to these business segments.
A geographic segment is defined as the origin or area from which products or services of an organization are supplied to a third party or another segment within the same organization. This is crucial in segmental reporting to understand performance disparities across different regions.
An income-generating unit (IGU) is a distinct segment within a business or an investment that is capable of generating revenue independently. Understanding IGUs is crucial for effective financial reporting and valuation.
Segment margin is a profitability measure used to evaluate the financial performance of a business segment, such as a division, territory, or product line. It equals segmental revenue minus related product costs and traceable operating expenses attributable to that segment.
Segmental reporting entails the disclosure in annual accounts and reports of financial results of major operating and geographic segments within a diversified group of companies. This practice offers investors insight into the profitability, risk, and growth prospects for individual segments of a business.
