In: Accounting
What is segmented information, and how do companies determine segments? What are three advantages and three disadvantages of segmented financial data? Give your opinion on whether or not the advantages outweigh the disadvantages. Outline the manner in which Verizon segments its financial data. Suggest key actions that Verizon’s management can take in order to improve the company’s segmented financial data.
Segment information is the financial information about different segments of an entity. Segment information include segment profit and loss statement, assess and liabilities and cash flow information of different segments. Segments are either determined on the basis of geographical area of operation of an entity or on the basis of products and services or both. Thus, companies identify the different segments on the basis of geographical area of operations or products and services or both.
There are number of advantages and disadvantages of segment information; these are as following:
Advantages:
Disadvantages:
Yes, advantages of preparation of segment information far outweigh the disadvantages. The segment information is primarily for the management and internal stakeholders of the organization. Such information helps the management to correct decisions to improve the financial performance and position of different segments and subsequently the overall performance and position of the entity improve.
Verizon has provided its segment data in a compact and precise manner. The financial information as to the revenue, profit and loss of different segments have been clearly reported in segment reports. However, the lack of clarity of the organization while identifying the reporting segments can be improved by providing the basis which have been used to identify reportable segments. Apart from the segment information should have detailed information as to the revenue, expenditures, assets and liabilities of different segments.