Capital employed

From Wikipedia, the free encyclopedia

This article may need to be wikified to meet Wikipedia's quality standards.
Please help improve this article, especially its introduction, section layout, and relevant internal links. (help)

The assets within a manager's direct span of control. These assets typically include accounts receivable, inventory, and plant and equipment. Sometimes, corporate-level assets, such as unamortized goodwill, are also allocated to profit centers to be included..

Formula: Capital Employed = Fixed Assets + Current Assets - Current Liabilities

or: Capital Employed = Fixed Assets + Working Capital (as working capital = Current Assets - Current Liabilities)

We may consider an example from a Balance Sheet and apply the above formula.

The Capital Employed figure can be very helpful in calculating the various financial ratios like ROCE and help in making financial decisions.

Retrieved from "http://en.wikipedia.org../../../c/a/p/Capital_employed.html"