What financial aspect does an investment centre typically focus on?

An investment centre primarily focuses on Return on Capital Employed (ROCE) as it is designed to evaluate the profitability and efficiency of the investments made by the centre. ROCE measures how well a company or division generates profits from its capital. This metric provides a clear indication of the financial performance relative to the capital used, allowing management to assess how effectively the centre is utilizing its resources to generate returns.

The focus on ROCE is crucial because investment centres are responsible for their own funds and the decisions regarding capital expenditures. The goal is to ensure that the returns from investments exceed the costs of capital used, promoting better financial decision-making and strategic investment planning.

Other aspects, while important in different contexts, do not capture the investment centre's primary objective as effectively. For instance, short-term cash flow is more relevant to operational decision-making rather than long-term investment efficiency. Sales volume focuses solely on revenue generation, which does not take into account the costs associated with capital. Employee satisfaction, while vital for organizational health, does not directly influence the financial performance metrics that investment centres aim to optimize. Thus, focusing on ROCE directly aligns with the investment centre's mandate to maximize financial performance through efficient use of capital resources.