GENERAL KNOWLEDGE

Detailed explanation-1: -Capital employed, also known as funds employed, is the total amount of capital used for the acquisition of profits by a firm or project. Capital employed can also refer to the value of all the assets used by a company to generate earnings. By employing capital, companies invest in the long-term future of the company.

Detailed explanation-2: -Capital employed can give you an overview of how well a company is investing its money to generate profits. Capital investments could include stocks and long-term liabilities. It also produces a simple measure of the value of assets held by a business against current liabilities.

Detailed explanation-3: -The denominator, capital employed, is equal to the sum of shareholders’ equity and long-term debts. More specifically, all the assets sitting on a company’s balance sheet – i.e. the resources with positive economic value – were originally funded somehow, either using equity or debt (i.e. the accounting equation).