why is the segment by segment information important for an investor to have 613823

Segment Reporting

TRW, Inc., is a global company that specializes in producing automotive, spacecraft, and information system products. The following (partial) segment data was reported (dollars in millions):

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December 31

1994

1993

Sales:

Automotive

$5,679

$4,538

Space and defense

2,812

2,792

Information systems

596

618

Operating profit:

Automotive

$476

$309

Space and defense

175

199

Information systems

96

74

Identifiable assets:

Automotive

$3,481

$3,004

Space and defense

1,111

1,253

Information systems

622

752

Required

a. Calculate the return on assets of 1994 for each segment (use operating profit and ignore interest expense).

b. Calculate each segment’s operating income as a percentage of sales.

c. Why is the segment-by-segment information important for an investor to have? Which ratio results will be most important to investor

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