Intersegment Sales

AAA

DEFINITION of 'Intersegment Sales'

The transfer or exchange of goods for monetary compensation from one department in a company to another department within the same company. Intersegment sales exists where a corporation has multiple segments or divisions, and product sales occur between these segments. A segment report containing data related to intersegment sales and transfers is typically included in a corporation's annual report.

INVESTOPEDIA EXPLAINS 'Intersegment Sales'

Segments are components of the same corporation or entity that provide products (or a group of products) that have different risks and returns than another segment. Intersegment sales can be manufacturing products, such as the sale or transfer of steel from one segment to another, or it can be a financial product, as with the banking and insurance industries. Accurate bookkeeping is important in order to correctly assign revenue and expenses related to the transfer or sales.

RELATED TERMS
  1. Segment Margin

    The amount of profit or loss produced by one component of a business. ...
  2. Consumer Goods

    Products that are purchased for consumption by the average consumer. ...
  3. Segment

    A component of a business that is or will generate revenues and ...
  4. Operating Income

    The amount of profit realized from a business's operations after ...
  5. Annual Report

    1. An annual publication that public corporations must provide ...
  6. After Tax Operating Income - ATOI

    A company's total operating income after taxes. This non-GAAP ...
RELATED FAQS
  1. What is the difference between an industry and a sector?

    The terms industry and sector are often used interchangeably to describe a group of companies that operate in the same segment ... Read Full Answer >>
Related Articles
  1. Active Trading

    The Importance Of Segment Data

    Key financials often fail to provide insight into large cap companies.
  2. Economics

    What is Value Added?

    Value added is used to describe instances where a firm takes a product and adds a feature that gives customers a greater sense of value.
  3. Economics

    What is a Wholly Owned Subsidiary?

    A company whose common stock is 100% owned by another company, called the parent company.
  4. Economics

    What is the Breakeven Point?

    In general, when gains or revenue earned equals the money spent to earn the gains or revenue, you’ve hit the breakeven point.
  5. Investing

    What's a Run Rate?

    Run rate is a term used to denote annualized earnings extrapolated from a shorter time frame. Management uses the run rate to estimate future revenues.
  6. Professionals

    Financial Accounting

    Financial accounting is the process of gathering, recording, summarizing and reporting financial data relating to a business. The ultimate goal is to accurately report the financial picture and ...
  7. Investing

    What's Marginal Revenue?

    In microeconomics, marginal revenue is the additional revenue generated by increasing sales revenue by one unit. Another way of saying this is that the marginal revenue is the revenue generated ...
  8. Investing

    What are Direct Costs?

    Direct costs for finished goods refer to the items and services directly used in production. Other costs such as rent and insurance for the production site are indirect costs. These costs may ...
  9. Investing

    What is the Debt-To-Capital Ratio?

    The debt-to-capital ratio is used to measure a company’s use of financial leverage. The ratio is the company’s total debt, divided by the sum of the company’s equity plus total debt.
  10. Investing

    What is Contingent Liability?

    A contingent liability is an amount that might have to be paid in the future, but there are still unresolved matters that make it only a possibility. Lawsuits and the threat of lawsuits are the ...

You May Also Like

Hot Definitions
  1. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  2. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  3. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  4. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  5. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  6. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
Trading Center