Net Capital Employed is equal to :
(A) Fixed Assets + Current Assets - Long term liabilities
(B) Non current Assets + Current Assets - Current liabilities
(C) Fixed Assets + Current Assets - Equity
(D) Equity + Debt
(E) Current Assets - Current liabilities
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (B) and (D) only
Capital employed is the long-term fund used in the business. It can be seen from either side of the balance sheet: as the long-term funds supplied, or as the net assets they finance:
(A) Fixed Assets + Current Assets − Long term liabilities — False. Deducting long-term liabilities leaves only shareholders’ funds.
(B) Non current Assets + Current Assets − Current liabilities — True. Total assets minus current liabilities are the net assets.
(C) Fixed Assets + Current Assets − Equity — False. This leaves the total outside liabilities.
(D) Equity + Debt — True. Shareholders’ funds plus long-term debt are the funds employed.
(E) Current Assets − Current liabilities — False. This is working capital only.
NCERT (2026-27 edition): |