Question

How to calculate percentage of revenue of capital employed from segment revenue for project 2th accountancy?

Answer 1

There are two ways that you can calculate the capital employed. The first is using a general formula used in order to calculate capital employed using the figures from a balance sheet. The simplest presentation of capital employed is total assets minus current liabilities.

Capital Employed = Assets - Current Liabilities

So if the assets on a balance sheet are $875,000 and the current liabilities total $265,000, the capital employed would be calculated as:



$875,000 - $265,000 = $610,000

Sometimes, capital employed is equal to all current equity plus interest-generating loans or non-current liabilities.

Capital Employed = Assets - Current Liabilities = Equity + Noncurrent Liabilities

The alternative way is using a simple method to determine capital employed by looking at a balance sheet. This involves four steps:

Locate the net value of all fixed assets. It's easiest to use original cost, but some prefer to use replacement cost after depreciation.

Add all capital investments into the business.

Add cash in hand, cash at bank, bills receivable, stock and other current assets.

Subtract current liabilities.


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