Business Segment Reporting

Business segment reporting is a style of financial reporting that breaks the huge final financial report into, well, segments.

It divides the financial data into pieces, for instance, by department, product, or subsidiary, and reports on the expenses, revenue, assets, and liabilities of each.

For example, let's say there's a bunch of doctors using one building for various surgeries. Maybe each floor breaks into a specialty: the main floor is the Ear Nose Throat area, the second floor is for surgeries on limbs, and the top floor works on the spine. It would be difficult to pinpoint financial issues with such a diverse group if you look at it en masse, but breaking it down by specialty, you could notice that the ENT group seems to not be collecting as much as they did in the past. From there, you can start drilling down on the "why," but at least now everyone knows which group is struggling and can start to make improvements.

The report doesn't have to break down into minute detail though. According to GAAP (Generally Accepted Accounting Principles), you only need to consider reporting a segment for areas that generate 10% of total revenue, total profits, or total assets.