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hope you are doing well, tutor…
I’ve a query about capital employed.. In business valuation topic, when we use capital employed, would it be okay if we use the beginning figure instead of capital emplyed at the end? Both would obviously give different results and interpretations..
Would that be okay?
ThanksI assume that you are talking about the calculation of the return on capital employed?
For this, you can use either the capital employed at the beginning of the year, or at the end of the year (unless of course the examiner specifies which to use).
It is actually more sensible to use the capital employed at the start of the year (and you could argue that the average capital employed would be better), but it very much depends on what information is available. Often you are only given capital employed at the end of the year and so you have no choice.Otherwise just make sure that you write down in the exam which one you are using 🙂
yes, this is what I was asking…
Thank you very much for replying..
God bless you..
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