Investment Center


DEFINITION of '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.

  1. Return On Investment - ROI

    A performance measure used to evaluate the efficiency of an investment ...
  2. Cost Center

    A department within an organization that does not directly add ...
  3. Economic Value Added - EVA

    A measure of a company's financial performance based on the residual ...
  4. Residual Income

    The amount of income that an individual has after all personal ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required ...
  6. Required Rate Of Return - RRR

    The minimum annual percentage earned by an investment that will ...
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