The formula for calculating the Segment Margin is:
\[ SEM = \frac{SR - SC}{SR} \times 100 \]
Where:
Segment Margin is a financial metric used to assess the profitability of a specific segment within a company. It is calculated by subtracting the total segment costs from the total segment revenue, dividing the result by the total segment revenue, and then multiplying by 100 to get a percentage. This metric helps in understanding the contribution of each segment to the overall profitability of the company.
Let's assume the following values:
Using the formula to calculate the Segment Margin:
\[ SEM = \frac{100000 - 60000}{100000} \times 100 = \frac{40000}{100000} \times 100 = 40\% \]
The Segment Margin is 40%.
