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For a brand, knowing each branch’s segment margin and operating income is important to decide to...

For a brand, knowing each branch’s segment margin and operating income is important to decide to dropped or the branch or not. can you explain why is that ?

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Answer #1

Answer: This is important because of the following reasons:

1. Impact the overall profitability: Suppose, if a branch segment is running at loss, the brand can discontinue its operations because it will impact the overall profitability of the brand and also it will impact the maximization of shareholder's wealth which is the ultimate aim of every business.   

2. Investments and credit decisions: By analysing the operating income of a particular branch segment we can also investment decision like whether we should infuse more funds in that particular segment or not whether it is worth continuig the operations or not.

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