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In: Accounting

Some people argue that providing segment leads to a competitive disadvantage for firms that are operating...

Some people argue that providing segment leads to a competitive disadvantage for firms that are operating successfully. Evaluate this argument

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Expert Solution

Segment Reporting in respect of the segments that are operating successfully is not providing competitive disadvantages for firms, because with these segment reporting identification of segments , its Asset , liability etc will help various stakeholders the way of generating the operating cash flows from the particular segment. It helps to understand the major segment contributing the entity as a whole. However, as already stated operating successfully, It emphasis very minutely over the particular segment only. Crystalize the picture of particular segment and top and bottom line of the particular segment.

From above it cannot be concluded that it is disadvantages for segment reporting although it mirrored the capital outlay requirement and churn out the operating cash flows from the particular business. The easily determinable over the terms of contribution on Overall Top Line and Bottom Line by particular segment. Hence, it is beneficial in all terms and provide eye opener report for both management and Stakeholders (Decision maker).

ekkarill92 answered 1 year ago
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