Investment Center

What is an 'Investment Center'

A business unit that can utilize capital to directly contribute to a company's profitability. Companies evaluate the performance of an investment center according to the revenues it brings in through investments in capital assets compared to the overall expenses.


An investment center is sometimes called an investment division.

BREAKING DOWN 'Investment Center'

An investment center is different than a cost center, which indirectly adds profit and is evaluated according to the money it takes to operate. Moreover, unlike a profit center, investment centers can utilize capital in order to purchase other assets. Because of this complexity, companies have to use a variety of metrics, including return on investment (ROI), residual income and economic value added (EVA) to evaluate performance.

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RELATED FAQS
  1. What is the difference between ROCE and ROI?

    Understand the difference between return on capital employed and return on investment and how analysts use these performance ... Read Answer >>
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    Understand the limitations of the bottom line figure on a company's income statement and why it is insufficient for evaluating ... Read Answer >>
  3. What is the point of calculating economic value added (EVA)?

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  4. What's the difference between economic value added (EVA) and total revenue?

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