Chapter 3. Where do you make the money?
Now that you have defined your business in a new way, by its real business segments, the most important thing to know is which of these segments generate most of your profits, both in terms of absolute amounts of money and in terms of profitability (measured by return on sales, or, preferably, return on capital employed).
It is possible that your accounting systems already provide this information, or that they can be easily tweaked to do so. If so, great. It is much more likely, however, that profit by segment, the way we have just defined them, is not readily available.
What usually happens at this stage is that your accountant, or your systems analyst, tells you that to restate the accounts in the way you ...
Get The Financial Times Guide to Strategy: How to Create and Deliver a Winning Strategy, Third Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
