Segment finance · NetSuite TD3016323

Profitability Analysis by Segment

Revenue, gross margin, and contribution by location, product class, and department over the trailing twelve months, with the tagging gaps that limit what the segment view can say.

Prepared 2026-09-23 · Subsidiaries 1-3, elimination excluded · Source: NetSuite general ledger via SuiteQL · Prompt: Profitability Analysis by Segment, NetSuite AI Prompt Library v1 · Standard Review depth

Executive Summary

Measured on billed sales, the business has four operating segments by location and they are all profitable at the gross margin line, between 44% and 49%. Below gross margin the picture changes. The Los Angeles distribution center, the largest segment at $623,887 of revenue, keeps $29,377 after the operating expense assigned to it. Miami, the second largest at $393,564, loses $55,480 after its assigned expense: it carries $228,620 of operating cost against $173,140 of gross profit. The two retail stores are small and clean, $38,729 and $26,510 of contribution on almost no assigned cost.

The largest "segment" is the one with no location at all. Delivery service revenue of $682,677, 37% of billed sales, carries no location, no cost of goods, and no expense, and shows as pure contribution. It isn't. It is revenue whose costs are sitting in other segments or in the unassigned pool. Until it is tagged, every segment's contribution is understated by whatever share of that service it actually delivers, and Miami's loss may be partly an artifact of where the delivery cost landed.

Segment Profitability Ranking

Segments: location is the primary dimension, because it is the only one on which revenue, cost of goods, and operating expense are all tagged consistently in this account. Class and department views follow. Materiality: above 10% of revenue is material, 5 to 10% moderate, below 5% immaterial.

By location

Contribution after assigned operating expense, by location. Blue positive, red negative.

By product class

The class view has one anomaly worth a look: $484,449 of operating expense is tagged to the Miscellaneous class, which has $20,650 of revenue. Almost all of it is the Sales department's expense, tagged to a catch-all class rather than to the product lines it supports. It is the same problem as the delivery service, from the other side: cost with a segment but the wrong one.

By department

Portfolio Matrix

Based on: revenue share against gross margin, for the four located segments.

Cost Structure and Cross-Subsidization

Of $3,103,004 of operating expense in the ledger over the period, $487,949 is tagged to a location and the rest is not. Miami and Los Angeles absorb nearly all of the tagged expense. The stores absorb almost none. That is not evidence that the stores are cheap to run; it is evidence that store costs are booked without a location.

The cross-subsidy therefore runs in two directions at once. Delivery service revenue subsidizes nothing because it has no costs attached, and the stores appear to subsidize nothing because they have no costs attached either, while the two distribution centers carry expense that may belong partly to both. Any decision that depends on segment contribution, such as closing Miami, should wait until the tagging is fixed. Gross margin, which is tagged consistently, says all four segments are healthy.

Strategic Recommendations

• Tag the delivery service. Give the delivery item a location and a cost, or allocate delivery revenue and cost to the distribution center that ships the order. This one change would move $682,677 of revenue into the segment view.
• Retag the Sales department's expense from the Miscellaneous class to the product classes it serves, or leave it unclassed and allocate on revenue. Either is better than a catch-all.
• Do not act on Miami's contribution yet. Its 44% gross margin is two points below Los Angeles; its negative contribution is a function of expense assignment that the two points above show to be inconsistent.
• Book store expenses to the stores. Rent, staff, and utilities for two retail locations are somewhere in the $2,614,555 of unassigned expense.

Segment exit, major pricing changes, and reallocation of more than 20% of resources require human review under the prompt's controls. None is recommended.

Appendix: Data Lineage

Adaptations from the prompt's templates: amounts come from transactionaccountingline by posting period rather than transactionline.amount by date; the segment dimensions are read from the transaction line, with location added to the template's class and department; journal entries are excluded from the segment tables for the reason given in the basis note, and their totals are disclosed; transaction.subsidiary is not exposed, so the elimination subsidiary is excluded through the line.

SELECT NVL(BUILTIN.DF(tl.class),'Unassigned'), NVL(BUILTIN.DF(tl.department),'Unassigned'), NVL(BUILTIN.DF(tl.location),'Unassigned'),
       tl.subsidiary, a.accttype, t.type, SUM(-tal.amount) AS amt
FROM transactionaccountingline tal JOIN transaction t ON t.id = tal.transaction
JOIN transactionline tl ON tl.transaction = tal.transaction AND tl.id = tal.transactionline
JOIN account a ON a.id = tal.account JOIN accountingperiod ap ON ap.id = t.postingperiod
WHERE tal.posting = 'T' AND tl.subsidiary <> 4 AND a.accttype IN ('Income','COGS','Expense')
  AND ap.startdate >= DATE '2025-09-01' AND ap.enddate <= DATE '2026-08-31'
GROUP BY BUILTIN.DF(tl.class), BUILTIN.DF(tl.department), BUILTIN.DF(tl.location), tl.subsidiary, a.accttype, t.type

Appendix: Assumptions and Verification

Confidence: 90% in segment gross margins; 50% in segment contribution, because expense assignment is demonstrably incomplete. The Miami finding is a data-quality finding first and a business finding second.