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.
What is the formula for calculating capital employed?
Assets + liabilities
Revenue - expenses
Equity + loans
Net income + dividends
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.
What is the goal of any business with regard to capital employed?
To minimize its capital employed
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To maximize its capital employed
To keep its capital employed constant
To ignore the capital employed
What is the significance of maximizing the return on capital employed for a business?
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