- August 1, 2020 at 5:39 pm #578927thuyly134Participant
I don’t know the difference between Capital Employed and Equity. I’m always confused between “Capital” and “Equity”
Capital Employed = Equity + Long-term liability
Equity = Shares (common + preferences) + Reserves
Am I correct? Do you have lettuce that have explanation of these two? If the questions have a list of assets items, liabilty items, equity items, I am afraid I don’t know how to calculate them to apply to ROCE and Grearing ratio.
Thank you so much!!!!
- August 1, 2020 at 5:53 pm #578931John MoffatKeymaster
The two ‘equations’ that you have written are correct, and these are terms from Paper FA (was Paper F3) which presumably you have already passed or were exempt from.
I do explain the calculations of both the return on capital employed and the gearing ratio (which are obviously two completely different things) in my free lectures.
The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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