The correct answer is: C. Both A and B
Capital employed is the total amount of money that a company has available to invest in its business. It is calculated by adding together the company’s equity and long-term debt.
Equity is the money that the company has raised from its shareholders. This can be in the form of ordinary shares, preference shares, or retained earnings.
Long-term debt is the money that the company has borrowed from lenders. This can be in the form of bonds, loans, or mortgages.
Capital employed is an important measure of a company’s financial strength. It shows how much money the company has available to invest in its business. A high level of capital employed indicates that the company is well-funded and has the potential to grow. A low level of capital employed indicates that the company may be struggling to finance its operations.
Capital employed is also used to calculate a number of other financial ratios, such as return on capital employed (ROCE) and return on equity (ROE). These ratios are used to assess the profitability of a company.
Here is a brief explanation of each option:
- A. Equity is the money that the company has raised from its shareholders. This can be in the form of ordinary shares, preference shares, or retained earnings.
- B. Long term debt is the money that the company has borrowed from lenders. This can be in the form of bonds, loans, or mortgages.
- C. Both A and B is the correct answer. Capital employed is the total amount of money that a company has available to invest in its business. It is calculated by adding together the company’s equity and long-term debt.
- D. None of the above is the incorrect answer. Capital employed is not equal to any of the options listed.