Quick Finance Tip - Operating Segment

Operating segment is defined as a component of a company that:

1. Engages in activities that may generate revenue and create expenses;
2. Whose results are regularly reviewed by a company’s senior management; and
3. Where discrete financial information is available.

A company must disclose separate information about any operating segments, which meet certain quantitative criteria (i.e. if a segment constitutes 10% or more of the combined operating segments' revenues, assets, or profits, then more information requires disclosure).