Explore BrainMass
Share

Explore BrainMass

    Examinatoion of the capital employed ratio formula

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The capital employed ratio formula is used to determine how efficiently capital is being used to generate sales. It subtracts all assets not directly associated with operations, such as investments, and divides the remainder into annual sales.

    The variables are as follows:

    AR(Annualized revenue) / [ C(Capital) â?" A(assets not directly related to operations)] = CER(Capital Employed Ratio)

    Using the formula, what is the order in which you need to do the calculation?

    Why does it matter?

    © BrainMass Inc. brainmass.com October 10, 2019, 2:51 am ad1c9bdddf
    https://brainmass.com/business/business-math/examinatoion-capital-employed-ratio-formula-396850

    Solution Preview

    CER = AR(Annualized revenue) / [ Capital - Assets not directly related to operations)]

    Order of the calculation:

    Step 1: Simplify the denominator by
    ...

    Solution Summary

    The capital employed ratio formula is used to determine how efficiently capital is being used to generate sales. It subtracts all assets not directly associated with operations, such as investments, and divides the remainder into annual sales.

    $2.19