Overall Capital Employed

#1
While calculating ROCE i.e. return on capital employed we need to arrive at the overall capital employed, which is the sum of long term debt, short term debt and equity.

I have two questions regarding this.

1. Do we need to include the debt components from both current and non-current financial liabilities?

2. In the annual report which I am analysing there is a term other non-current financial liabilities which consists of:
a. Deposits/retention money from contractors & others.
b. Dues for capital expenditure
So, will these other non-current liabilities be considered as debt?

3. While calculating equity the annual report has split the equity in two components:
a. Equity share capital which are the number of shares issued
b. Other equity which includes reserves and surplus such as securities premium account, bonds redemption reserve, self insurance reserve, CSR activity reserve, General reserve, retained earnings etc.
Should the' b' part i.e. the other equity be considered while calculating the overall capital employed?

Please guide me.
 

paran

Active member
#2
While calculating ROCE i.e. return on capital employed we need to arrive at the overall capital employed, which is the sum of long term debt, short term debt and equity.

I have two questions regarding this.

1. Do we need to include the debt components from both current and non-current financial liabilities?

2. In the annual report which I am analysing there is a term other non-current financial liabilities which consists of:
a. Deposits/retention money from contractors & others.
b. Dues for capital expenditure
So, will these other non-current liabilities be considered as debt?

3. While calculating equity the annual report has split the equity in two components:
a. Equity share capital which are the number of shares issued
b. Other equity which includes reserves and surplus such as securities premium account, bonds redemption reserve, self insurance reserve, CSR activity reserve, General reserve, retained earnings etc.
Should the' b' part i.e. the other equity be considered while calculating the overall capital employed?

Please guide me.
Let me make a disclaimer first. I am still learning the basics same like you.

Q1. Yes

Q2. As for as I know, it is NOT a debt. You don't pay any interest to those amount but should be considered as a liability.

Q3. To make it simple Equity = Assets - Liabilities.
You can get total Assets & Liabilities figures in the Balance sheet.

@Alchemist, please correct me if I am wrong.
 
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