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Definition
Capital employed is the total capital invested in a business to generate its profits, commonly calculated as total assets less current liabilities, or as equity plus long-term debt. It's the denominator in return on capital employed (ROCE).
In plain terms
It's the pool of long-term money working in the business. Compared with the profit it produces, it shows how efficiently that money is being used.
Why it matters for your company
Return on capital employed tells you — and a lender — whether the business earns a good return on the money in it, a key sign of quality. See how lenders read your accounts.
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