What is Capital Employed?

Capital Employed represents the total value of capital used by a business to generate profits. It combines both equity and debt used to fund a company’s assets and operations.

Formula:

Capital Employed = Total Assets – Current Liabilities

or

Capital Employed = Equity + Non-current Liabilities

Uses:

• Measures a company’s capital efficiency

• Commonly used in financial ratios like Return on Capital Employed (ROCE)

• Helps investors assess financial health and asset utilization