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Segment Margin Ratio
08-25-2009, 05:08 PM
Post: #1
Segment Margin Ratio
Uses of Segment Margin Ratio

All Long run decisions are made on the basis of segment margin ratio.

<b>Calculation of segment margin Ratio</b>

Segment Margin/Net Sales*100

<u>Example</u>

Sales......................$50000
less variable cost..........30000
Contribution Margin.........20000
less traceable fixed cost...10000
Segment Margin..............10000


Segment Margin Ratio= 10000/50000*100

=20%

<font color="blue"><b>** Threads merged by Admin. Thread of duplicate nature removed. **</b></font id="blue">

Profitability measure used to evaluate the financial performance of a business segment (i.e., division, territory, product line). It equals segmental revenue less related product costs and traceable operating expenses attributable to that segment.
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