Capital employed
Capital employed is a measure of the resources committed to a business. In a common financial-statement analysis convention it equals total assets less current liabilities, which also equals equity plus non-current liabilities. It is the denominator in return on capital employed and in some asset-turnover calculations. A question may specify a different convention or an average balance; keep the chosen denominator consistent when comparing companies or years.
Worked example
Total assets are $800,000 and current liabilities are $150,000. Capital employed is $650,000. The same statement shows equity of $450,000 and non-current liabilities of $200,000, giving the same $650,000.
Common mistake
Do not confuse capital employed with working capital, share capital or total assets. State whether the calculation uses closing or average balances.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F3 | Supporting | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| CIMA | F1 | Supporting | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |