Investment center
In one sentenceAn organizational unit whose manager is accountable for revenues, costs and the funds invested in it together; its performance is measured by the return on those funds.
Simply put
A cost center is accountable for costs and a profit center for profit, while an investment center is also accountable for the assets it uses.
So it is not enough for the branch to make a profit; it must make a profit appropriate to the size of what was invested in it.
Worked example
A branch of a pharmacy chain made an operating profit of 300,000 SAR, and the assets invested in it are 2,000,000 SAR.
Branch profit300,000 SAR
Assets invested2,000,000 SAR
Return on investment300,000 ÷ 2,000,000 = 15%
Formula: Center profit ÷ assets invested in it
Don't confuse it with
Profit centerA profit center's manager is not asked about the size of the assets invested, while an investment center's manager is.