Definition of Capital employed:
By employing capital, companies invest in the long-term future of the company. Capital employed is helpful since it's used with other financial metrics to determine the return on a company's assets as well as how effective management is at employing capital.
Total capital harnessed in a firms fixed and current assets. Viewed from the funding side, it equals stockholders funds (equity capital) plus long-term liabilities (loan capital). Viewed from the asset side, it equals fixed assets plus working assets.
Capital employed, also known as funds employed, is the total amount of capital used for the acquisition of profits by a firm or project. Capital employed can also refer to as the value of all the assets used by a company to generate earnings.
How to use Capital employed in a sentence?
- Capital employed is derived by subtracting current liabilities from total assets; or alternatively by adding noncurrent liabilities to owners' equity.
- Capital employed tells you how much has been put to use in an investment.
- Return on capital employed (ROCE) is a common financial analysis metric to determine the return on an investment.
Meaning of Capital employed & Capital employed Definition