What Is a Profit Center? A profit center is a branch or division of a company that directly adds or is expected to add to the entire organization’s bottom line. It is treated as a separate, standalone business, responsible for generating its revenues and earnings. Its profits and losses are calculated separately from other areas
What Is Profit Margin? Profit margin is one of the commonly used profitability ratios to gauge the degree to which a company or a business activity makes money. It represents what percentage of sales has turned into profits. Simply put, the percentage figure indicates how many cents of profit the business has generated for each dollar
What Is Private Equity Real Estate? Private equity real estate is an alternative asset class composed of professionally managed pooled private and public investments in the real estate markets. Investing in private equity real estate involves the acquisition, financing, and ownership (either direct or indirect) of property or properties via an investment fund. Private equity
What Is a Private Finance Initiative (PFI)? A private finance initiative (PFI) is a way of financing public sector projects through the private sector. PFIs alleviate the government and taxpayers of the immediate burden of coming up with the capital for these projects. Under a private finance initiative, a private company handles the up-front costs
What Is a Private Foundation? A private foundation can be a charitable organization that, while serving a good cause, does not qualify as a public charity by government standards. Private foundations can also be nonprofit organizations whose trustees or directors manage funds and programs. They are usually created via a single primary donation, called an
What is a Private Good? A private good is a product that must be purchased to be consumed, and consumption by one individual prevents another individual from consuming it. In other words, a good is considered to be a private good if there is competition between individuals to obtain the good and if consuming the
What is a Private Investment Fund? A private investment fund is an investment company that does not solicit capital from retail investors or the general public. Members of a private investment company typically have deep knowledge of the industry as well as investments elsewhere. To be classified as a private fund, a fund must meet
What Is a Private Placement? A private placement is a sale of stock shares or bonds to pre-selected investors and institutions rather than publicly on the open market. It is an alternative to an initial public offering (IPO) for a company seeking to raise capital for expansion. Private placements are regulated by the U.S. Securities and
What Is a Private Purchase? Private purchase refers to an investment in which an individual or institutional investor purchases shares in a privately-held firm. The investor may buy all of the company’s shares, or just a portion of them. The fact that a private purchase does not involve the use of capital markets means that
What is the Private Sector? The private sector is the part of the economy that is run by individuals and companies for profit and is not state controlled. Therefore, it encompasses all for-profit businesses that are not owned or operated by the government. Companies and corporations that are government run are part of what is known
