Capital employed!!

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mahdi87
mahdi87 Registered Posts: 121 Dedicated contributor 🦉
in AAT Level 4 (Level 8 in Scotland)
hi guys

i got problem i forgot how to calculate capital employed!! can some1 give me the formula

thank you:001_tongue:

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  • troy
    troy Registered Posts: 275 Dedicated contributor 🦉
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    Hi,
    Capital employed is Share capital + reserves + all non-current liabilities.
    Return on capital employed is Profit from operations/capital employed.
    For the FULL list of ratios see the post of 'I Will Help'....the list is on page three.

    Hope this helps
    x
  • mahdi87
    mahdi87 Registered Posts: 121 Dedicated contributor 🦉
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    hi i am stuck in June 2008 sec 2 task 1.1 a (vi) question please show me how to work it out. especially the capital employed in that Q
    thanks
  • Londina
    Londina Registered Posts: 814 Epic contributor 🐘
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    basically capital employed is not equity?

    they call it so many ways I don't know which one is
  • jackiepowell
    jackiepowell Registered Posts: 72 Regular contributor ⭐
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    Ive tried to remember it as Operating Profit/ Net Assets x 100...is that right?

    I dont even know what ROCE is!!! lol...What is it? and why do we use it?
  • troy
    troy Registered Posts: 275 Dedicated contributor 🦉
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    Capital employed is equity + non-current liabilities.

    You can also separate them into what your equity is made up of, so it is:
    Share capital and premiums + reserves + non-current liabilities (long term loans and debentures)
  • lork
    lork Registered Posts: 97 Regular contributor ⭐
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    Never mind...
  • Londina
    Londina Registered Posts: 814 Epic contributor 🐘
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    troy wrote: »
    Capital employed is equity + non-current liabilities.

    You can also separate them into what your equity is made up of, so it is:
    Share capital and premiums + reserves + non-current liabilities (long term loans and debentures)

    but when you do a financial statement, you don't put the long term liabilities into equity...inside there is only included shares and reserves!
    if you open DFS book, it's in this way and the capital employed used is basically equity or your net assets!
  • troy
    troy Registered Posts: 275 Dedicated contributor 🦉
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    You can do it that way also, as it does say that your way is the alternative way of doing it- just make sure you write you formula next to the answer so the person marking your paper knows where you get your figure.

    If you think about it though all Capital Employed is the amount of available funds you have, hense why you you the money from non-current assets and all your equity.

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