What is Investment Center?

An investment center is responsible for the growth in revenue of a business or entity through various investments in capital assets.

This investment center sometimes called an investment division or department. The performance of investment center can be evaluated by taking into account the revenues earned through investment in capital assets excluding expenses. An investment center has its own financial reports like balance sheet etc.

An investment center is one of the best reporting methods used to measure the performance of a business.

Investment center calculates the return on investment to measure business performance.

Here is the formula to calculate ROI:

ROI = Operating Income / Total assets

ROI can also be calculated Profit Margin & Asset Turnover

Some reporting methods are:

  • Cost Center: Performance measured on the basis of costs a business incurs
  • Profit Center: In this method business unit performance measured on the basis of profit earned
  • Investment center: In this method performance measured on the basis of ROI

You can read other accounting terms here: http://blog.slickaccount.com/category/accounting/accounting-terminology/



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