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Sir John,
For capital employed I know we can calculate it two ways
1. Total asset less current liabilities
2. Share capital + reserves + long term borrowings
If we are given non current assets and Net current assets. Do we less the net current asset from current asset to get capital employed?
No. The capital employed is equal to the non-current assets plus the net current assets (i.e. current assets minus current liabilities). Think back to your studies for Paper FA 🙂
Sir John
Non Current Assets 700,000
Current Assets 200,000
Current liabilities 500,000
So, capital employed is
700,000 + (200,000 – 500,000) = 400,000
Is this correct?
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