TAILIEUCHUNG - Lecture Managerial accounting - Appendix B: Profitability analysis

Perhaps more than any other information, managers would like to know the profitability of their products, customers, and other business segments. Accordingly, this appendix provides a coherent framework for measuring profitability. It distinguishes between absolute profitability and relative profitability. | Profitability Analysis Appendix B McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Appendix B: Profitability Analysis Perhaps more than any other information, managers would like to know the profitability of their products, customers, and other business segments. Accordingly, this appendix provides a coherent framework for measuring profitability. It distinguishes between absolute profitability and relative profitability. Absolute Profitability Absolute profitability measures the impact on the organization’s overall profits of adding or dropping a particular segment such as a product or customer – without making any other changes. Absolute profitability measures the impact on the organization’s overall profits of adding or dropping a particular segment such as a product or customer – without making any other changes. For example, if Coca Cola were considering closing down its operations in the African country of Zimbabwe, managers would be .

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