Definition for : Capital-employed analysis

In the capital-employed analysis, the Balance sheet shows all the uses of funds for the company's operating cycle and analyses the origin of its sources of funds. A capital-employed analysis of the Balance sheet serves three main purposes: to understand how a company finances its Operating assets; to compute the Rate of return on Capital employed; and as a first step to valuing the Equity of a company as a Going concern.

(See Chapter 4 Capital employed and invested capital of the Vernimmen)

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