How do you calculate sales and profitability by Region?

a. Definition of sales: Is it sales to distributor, sub-distributor, dealer or end customer? Different companies recognise revenue at different layers of the sales process. I am assuming that sales to distributor is recogonised as sales. b. In case of “Sales by Region”, this it is very easily the amount of purchase by the distributors in that period, in that region, nett of returns. c. In some cases, people also reduce the old stock (stock >180 days, 360 days, depending on the industry) and write it off from sales recognition. d. Profitability, as you expect is tricky. Let us assume that there is Gross Profit figure: Gross Profit = Cost realised by company - Cost of goods sold including royalties and licence fees. Profitability = Gross Profit - Cost of sales. Cost of sales = Cost of marketing (let us come back to it) + cost of sales discounts + cost of the sales team involved + cost of marketing team involved + logistics cost + all the other costs of the organisation. Cost of marketing= Sometimes, the cost of this is amortised over 1–2 years as some of the marketing campaign have long term impact. Profitability is also linked to “Average Selling Price” of the business. e. Profitability by region: To do this, you might have to derive some simpler metrics. Simplest way: Take the overall profitability and distribute it by volume or by headcount. More complex: Take the overall profitability by product series. Distribute it based on the product series mix of each of the regions. More complex: Take the above number of profitability, take the actual costs (headcount, logistics, stock write off, marketing etc.) and find the actual profitability. If you consider India as a region, I am sure most of the companies do the third approach. But for most practical purposes of within India business (especially not very large), the first or second approach will do good. Hope that helps. read less