How does Trefis allocate corporate-level costs and operating investments to each division?
We typically allocate indirect costs / investments (like corporate SG&A and corporate Capital Expenditures) to each division pro rata based on that division’s gross profits or EBITDA. In some cases the allocations are based on divisional revenues. We also make occasional exceptions when we believe that such an allocation does not make sense. For example, if a company has three unrelated divisions of which only one is the primary beneficiary of the company’s Capital Expenditures then we will adjust the allocation accordingly.
