Chapter 7, Problem 5BTN

To determine

Introduction:

Segment Reporting:

The reporting policy of the company based on the business or operating segment or geographical coverage of the business is called segment reporting.

Business segment provides information related to individual products and services or group of products and services that are different from other business segments. Geographical segment provides information related to products or services within a particular economic environment that are different from other geographical area.

Segment reporting helps in better understanding of the company, better assessment of risks and returns and enables good comparability that helps in taking appropriate decisions by the management.

Requirement-1:

To identify:

The seven business segments operated by HP from its annual report for the fiscal year ended 2015.

To determine

Requirement-2a:

To identify:

The operating segment of HP that had the largest dollar amount of operating income during the fiscal year 2015.

To determine

Requirement-2b:

To identify:

The operating segment of HP that had the largest amount of assets during the fiscal year 2015.

To determine

Requirement-3a:

To compute:

The return on assets for each business segments for the fiscal year 2015 using the operating income and segment total assets.

To determine

Requirement-3b:

To discuss:

The highest return on assets of HP for the fiscal year ended 2015 to measure the profitability of the segment in relation to its total assets.