Select the correct code of the Assertion (A) and Reasoning (R):

Assertion (A): Companies should measure the profitability of their products, territories, customer groups, segments, trade channels and order sizes.

Reasoning (R): Measure of profitability helps companies determine whether to expand, reduce, or eliminate any product or marketing activities to ensure profitability control.

Code:

The correct answer is Both (A) and (R) are correct and (R) is the right explanation of (A).

 Key Points

Assertion (A): Companies should measure the profitability of their products, territories, customer groups, segments, trade channels and order sizes.

• A company's profitability position is the only reason for its existence.
• For the purpose of understanding the company's financial status, profitability is periodically measured.
• A business evaluates the profitability of its goods, clients, market segmentation, order sizes, distribution routes etc.

So, the Assertion is absolutely correct.

Reasoning (R): Measure of profitability helps companies determine whether to expand, reduce, or eliminate any product or marketing activities to ensure profitability control.

• Profitability of every segment of the company must be measured so that any discrepancies can be deleted, if found.
• This measure of profitability helps a company to decide whether to expand, reduce, diversify or eliminate any product.
• Companies determine their competitive position within an industry using this profitability assessment.

So, the Reason is correct here.

Hence, the correct answer is Both (A) and (R) are correct and (R) is the right explanation of (A).