profit center

noun

|Updated on: 6 Aug 2018

Definition of profit center

: a part of a corporation or its product line that is an important source of profits

Recent Examples of profit center from the Web

The chip unit, now controlled by Bain Capital, was Toshiba’s biggest profit center.

— kosaku narioka, WSJ, "Toshiba Corp. Plans Biggest Japanese Market Buyback on Record," 13 June 2018
Big Marijuana routinely targets vulnerable communities as its profit centers.

— patrick kennedy and, WSJ, "This Is No Time to Go to Pot," 14 June 2018
North Korea’s arsenal has long been one of the isolated country’s few profit centers.

— david e. sanger, New York Times, "Trump Greets Plans for North Korea-Syria Meeting With Deafening Silence," 4 June 2018
For his part, Mr. Stevens has contributed to the restructuring of GM’s operations in South America and Korea, and to turning the company’s in-house lending arm into a profit center.

— aisha al-muslim, WSJ, "General Motors CFO Chuck Stevens to Retire After 40 Years with Auto Maker," 13 June 2018
Last week, Toshiba completed the sale of its main profit center, its flash-memory semiconductor business, to a consortium led by U.S. private-equity firm Bain Capital, although Toshiba will retain a 40% stake.

— takashi mochizuki, WSJ, "Toshiba to Close the Book on Its Laptop Unit," 5 June 2018
The department uses liaisons throughout the city to keep abreast of the concerns of local residents, but prosecutors say that Mr. Reichberg considered the post as both a public-service job and a personal profit center.

— alan feuer, New York Times, "Tracking Graft, From the Bootlegger to the Mayor," 27 Apr. 2018
While some mark-up is necessary—three times wholesale is generally considered acceptable, to cover the cost of service—the wine list is too often treated as the restaurant’s prime profit center.

— lettie teague, WSJ, "The Hidden Equation Behind ‘Expensive’ Wine," 22 Mar. 2018
Another profit center for network navies is the deletion of negative posts on social media sites by aggressive use of sites' moderation flagging, hacking, or paying off insiders with administrative access to various platforms to delete the posts.

— sean gallagher, Ars Technica, "China launches salvo against “network navy” of trolls who spread fake news," 6 Feb. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'profit center.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of profit center

1955

in the meaning defined above

See Words from the same year

NEW! Time Traveler

Financial Definition of PROFIT CENTER

profit center

noun

What It Is

A profit center is a part of a company that directly adds to its profits.

How It Works

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.

Source: Investing Answers