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NISM Certifications · NISM-Series-XV: Research Analyst · Company Analysis - Business and Governance

Company A's segment report shows: Segment X revenue Rs 600 crore, segment profit Rs 90 crore; Segment Y revenue Rs 300 crore, segment profit Rs 60 crore; Segment Z revenue Rs 100 crore, segment loss Rs 10 crore. Which statement is correct?

Segment Y has the highest margin at 20% (60/300), against 15% for X and minus 10% for Z. Combined segment profit is 90 plus 60 minus 10, which equals Rs 140 crore. Treating the loss as a profit or ignoring it gives wrong totals.

  1. ASegment Y has the highest margin at 20%, and the company's combined segment profit is Rs 140 croreCorrect
  2. BSegment X has the highest margin at 15%, and combined segment profit is Rs 150 crore
  3. CSegment Y has the highest margin at 20%, and combined segment profit is Rs 160 crore
  4. DSegment Z contributes positively with a margin of 10%

Explanation

Margins: X = 90/600 = 15%; Y = 60/300 = 20%; Z = -10/100 = -10%. Combined profit = 90 + 60 - 10 = 140 crore. Ignoring the loss gives 150, and adding it gives 160, both wrong. Z has a negative margin.

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