Investment center: Difference between revisions
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==See also== |
==See also== |
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* [[Cost centre]] |
* [[Cost_centre_(business)|Cost centre]] |
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* [[Profit centre]] |
* [[Profit centre]] |
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Revision as of 15:28, 24 June 2010
An investment center is a classification used for business units within an enterprise. The essential element of an investment center is that it is treated as a unit which is measured against its use of capital, as opposed to a cost or profit center, which are measured against raw costs or profits.
The advantage of this form of measurement is that it tends to be more encompassing, since it accounts for all uses of capital. It is susceptible to manipulation by managers with a short term focus, or by manipulating the hurdle rate used to evaluate divisions.