Capital Employed Calculator

It indicates the amount that has been invested in the company with the purpose of deploying that in the creation of assets. And those assets will eventually be used by the company to generate revenues and profits. Further, it comprises all the funds that a company has, either in the form of equity or debt. And the Equity includes all the funds belonging to the company’s owners, that is, the total paid-up share capital and the accumulated profits available with the company in the form of reserves. At the same time, debt includes all the long-term borrowings of the company. This capital employed calculator is an online tool to help us calculate the amount of capital invested in the company.

Consider the following formula for calculating capital employed:

Capital Employed = Fixed Assets + Non-Current Investments + Current Assets – Current Liabilities

Basically, current assets less current liabilities is nothing but the working capital, and hence, the above formula can be summed up as:

Capital Employed = Fixed Assets + Non-Current Investment + Working Capital

One more way to calculate the above is by using the components of the liability side is as below:

Capital Employed = Share Capital + Reserves and Surplus + Long-Term Borrowings

Capital Employed Calculator

How to Calculate using Calculator?

The user is required to enter the following details into the capital employed calculator:

Fixed Assets – Enter the total amount of fixed assets as appearing in the balance sheet of the company. If the company records the assets at historical cost, take the net value by deducting depreciation from the historical cost. The market value of the assets may be different from their book value. In this case, consider the market value as the asset can be sold or replaced at such value only. However, generally for an ongoing business in routine, we take the values as per the balance sheet and not the market value.

We use market value when any asset transfer, investments in the company, merger, or acquisition transactions are under consideration.

Non-Current Investments – Enter the amount of non-current investments in the above calculator, if any, the company makes.

Current Assets – Enter the total current assets held by the company. These are the assets that can be converted into cash within a period of 12 months. This includes its current investments, trade receivables, cash and cash equivalents, inventories, and other current assets.

Current Liabilities – Current liabilities of a company include its short-term liabilities that are due for payment within a period of 12 months from their accrual.

Sanjay Borad

Sanjay Bulaki Borad

MBA-Finance, CMA, CS, Insolvency Professional, B'Com

Sanjay Borad, Founder of eFinanceManagement, is a Management Consultant with 7 years of MNC experience and 11 years in Consultancy. He caters to clients with turnovers from 200 Million to 12,000 Million, including listed entities, and has vast industry experience in over 20 sectors. Additionally, he serves as a visiting faculty for Finance and Costing in MBA Colleges and CA, CMA Coaching Classes.

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