Capital Employed (Assets Method)
Capital Employed (Equity Method)
Definition – What is Capital Employed?
Capital employed is the total amount of capital employed in the firm. It is often illustrated as the total assets less current liabilities (debts that are due in the near future).
Formula – How to calculate Capital Employed
Capital Employed (Assets Method) = Total Assets – Current Liabilities
Capital Employed (Equity Method) = Equity + Non-current Liabilities
Assets Method – A company has total assets of $50,000 and current liabilities of $10,000.
Capital Employed (Assets Method) = $50,000 – $10,000 = $40,000
Equity Method – A company has equity of $50,000 and non-current liabilities of $75,000.
Capital Employed (Equity Method) = $50,000 + $75,000 = $125,000
Sources and more resources
- Wall Street Mojo – Capital Employed Formula – An explanation of the concept of capital employed.
- Investopedia – Capital Employed & How can I calculate capital employed from a company’s balance sheet? – Some notes on capital employed.
- Bizfluent – How to calculate capital employed – A short summary on how to calculate capital employed.