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+--- Thread: Segment Margin Ratio (/thread-segment-margin-ratio)
Segment Margin Ratio - shahid amin - 08-25-2009
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%
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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.