Interpretation of Accounts Using Simple Accounting Ratios Equity: Capital Employed - SS2 Accounting Past Questions and Answers - page 1
What is capital employed?
The amount of money invested in a business by its owners and/or lenders.
The amount of money a business has in its bank account.
The amount of revenue a business generates in a year.
The amount of money a business owes to its suppliers.
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What is the formula for calculating capital employed?
Assets + liabilities
Revenue - expenses
Equity + loans
Net income + dividends
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Why is capital employed important for businesses?
It measures the efficiency and profitability of a business.
It helps businesses avoid paying taxes.
It determines the size of a business's workforce.
It determines the price of a business's products.
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What is the goal of any business with regard to capital employed?
To minimize its capital employed
To maximize its capital employed
To keep its capital employed constant
To ignore the capital employed
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How is capital employed calculated?
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What is the significance of maximizing the return on capital employed for a business?
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