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Invested Capital, Capital Employed and Total Capital.

Hi,

I have been reading through old forum discussions and tried to find final answers elsewhere as well, but I seam to find conflicting answers.

We come across these definitions in various formulas, ROIC, ROCE, EVA and I wondered if anyone has clear definitions of them. And how we can find the required information, also if there are multiple ways to find the information that I should be aware of. My understanding is in the () below.

1. Invested Capital (Same as NOA. NOA = (Tot A - Cash) - (Tot L - Debt) 

  • Is this correct? If it is, do we include all Debt?
  • Are there any other ways to define this?

2. Capital Employed (MvEquity + MvDebt)

  • Is this correct? If it is does it include preferred equity and is there any part of Debt I should not include?
  • Are there any other ways to define this?

3. Total Capital

  • I am not sure about the definition here. Any differences from Capital Employed?

Thank you for your help.

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Sorry it’s an old topic but I am really interested to hear answers as well as I’m having a hard time understanding those 3 terms.

Maybe @Thammer you know the answers now ?

Thanks !

My view:

1. Invested Capital (Same as NOA. NOA = (Tot A - Cash) - (Tot L - Debt) –> Covers only the operating assets/liabilities

  • Is this correct? If it is, do we include all Debt? Only long-term interest bearing debt
  • Are there any other ways to define this? Yes, IC = operating long-term Assets (e.g. PPE) + NWC

2. Capital Employed (MvEquity + MvDebt) –> Covers only the long-term employed asset base

  • Is this correct? If it is does it include preferred equity and is there any part of Debt I should not include? No, this should be defined as total assets minus current liabilities
  • Are there any other ways to define this?

3. Total Capital –> Covers all the companies assets or equal total equity plus debt plus current liabilities and can be measured in market or book values

  • I am not sure about the definition here. Any differences from Capital Employed? Definition is just the total asset number in the BS or if measured in market values the current market cap plus the current market value of debt.