Using Return on Assets to Measure Profit Centers

The use of return on assets is extremely valuable in the management of profit centers. A profit center is a business entity that is dedicated to a specific market, distribution channel, or set of customers. It has its own strategy and perhaps even its own business model, the one that is best suited to making that type of business successful and profitable. These profit centers may be called strategic business units (SBUs). Each has its own balance sheet, for which the unit’s management is responsible.

These businesses need not be legal entities, nor do they need to have complete balance ...

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