Total Assets represent the entire value of a company's assets, which include both current assets (assets expected to be converted into cash or used up within one year) and non-current assets (assets that are expected to provide economic benefits for more than one year).
Current Liabilities are the company's short-term obligations that are expected to be settled within one year. These include liabilities like accounts payable, short-term loans, and other short-term debts.
Capital Employed refers to the total amount of capital invested in the business. It is the difference between the total assets that are used to generate revenue and the short-term obligations that need to be settled in the near future.
The formula for calculating Capital Employed is: Capital Employed = Total Assets - Current Liabilities
Capital Employed is an essential financial metric as it represents the amount of funds that the company has employed in its operations to generate revenue. It indicates the long-term funds invested in the business after deducting short-term liabilities. Capital Employed is a useful measure for assessing the efficiency and profitability of a company, as it considers the resources employed in the business regardless of how they are financed, whether through equity or debt. |
