A profit center is a part of a company that directly adds to its profits. How It Works/Example:
A company may have a variety of distinct departments, divisions, or operating groups, each with separate responsibilities and each contributing to the overall success of a company. Cost centers, for example, such as accounting, auditing, or inventory control, have costs, but do not contribute revenues. As a result, they do not produce profits. A profit center, on the other hand, is directly involved in producing revenues, and, if it is managed well, its revenues exceed its costs and it produces a profit. Why It Matters:
A profit center must be carefully managed to ensure that the sales generating activities lead to more revenues than the cost of those activities, thus producing a profit. Creating separate profit centers within a company allow the management to evaluate the profitability of each unit or business activity. When assessing a company, it is useful for an investor to classify various components of a business into cost and profit centers, allowing the investor to evaluate the prospects of various divisions on a stand-alone or restructured basis and the allocation or elimination of the costs found in the cost centers. * Allied Banking Corporation
* Bankard, Inc.
* Globe Telecom, Inc.
* Aboitiz Power Corporation
* 2GO Group, Inc.
* Concrete Aggregates Corporation
* Alliance Select Foods International, Inc.
* ABS-CBN Holdings Corporation
* Universal Robina Corporation
* Acesite (Phils.) Hotel Corporation
Who would have guessed that a giant cartoon bee character could become the national symbol for delicious, affordable and fast food in the Philippines? Well, that’s what began in 1975 when Tony Tan Caktiong opened an ice cream shop in Cubao, Quezon City. The results of his efforts has been nothing short of phenomenal. Though Jollibee began as an ice cream parlor, it was the move to diversify to more types of food...
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