In my previous question I asked why current liabilities are excluded from Capital employed. As for some reason that question is closed now I will continue here. If I understand correctly ROCE measures how efficient management uses resources available to them. Capital employed = Equity + long term liabilities. But what about short term loans (part of current liabilities)? Aren’t they source of resources (capital) as well?
Thank you in advance!
Capital employed only refers to long-term capital, not short-term capital.
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