Investment centre

Investment centre is the broadest type of responsibility centre, where a manager controls both the profit earned and the capital base deployed to earn it.

Also known asinvestment center

ByHoang TruongUpdated June 30, 2026

FrameworkResponsibility accounting

See it move

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A tree diagram shows ROI of 15% at the root, connected by a division symbol to two child nodes: operating profit of €1.8m and investment base of €12m. The structure makes explicit that ROI is a ratio — the manager is accountable for both the numerator (profit) and the denominator (assets employed). An investment centre is accordingly the most comprehensive type of responsibility centre, because costs, revenues, and capital allocation all fall within the manager's control.

Where it fits

TopicResponsibility Accounting & DecentralisationCoreSubjectManagerial AccountingCoreTopicDivisional Performance MeasurementCore

The formula

LaTeX

\text{ROI} = \frac{\text{Operating Income}}{\text{Investment Base}}

Variables

$R O I$: Return on investment (%)
$I n v es t m e n tB a se$: Total (or net) assets assigned to the division (€)

LaTeX

RI = \text{Operating Income} - (r \times \text{Investment Base})

Variables

$R I$: Residual income; positive signals value creation above the hurdle rate (€)
$R e q u i r e d R a t e$: Hurdle rate (often the group's WACC or target return) (%)

Check yourself

PracticeCORE

A firm has four responsibility centres. Which is best classified as an investment centre?

Select an answer to check your understanding.