1. Gross Capital Employed = Fixed Assets + Current Note : While calculating Gross Capital Employed, market value oPassety Should ken into consideration Oo es IS 2. t Capital Exfployed = total Gu heen —Cufrent Liabilities “© Rt 3(Proprietor’s) Net Capital Employed Tt Oo tL bs >—— ‘ixed Assets + C) ssef {Outside Liabilities pening Capital Employed + Closing Capital 7 2 fm F_ Closing Capital Employed ~} of Profit earned during the yet See — 4. Average Capital Employed 4 . Zp Opening Capital Employed +3 of Profit earned during the yet | ge Capital Bmnitved NOt Profit (Before TatevESCand Tax) Ki Capital d 5. turn on Capit i ye Capital Emploved x 100 a nd TAS, sg, LO ; Proprietor’s Fund Eat a, Where, uM i (Proprietors’ Fund as Stan Sat Preference Share G wal 7 + Reservé“& Surpluse — Fictitious Assets” Net Profit (After Interét, | le 1. Return on(Equity Share Capitay- P& and Pi ed Prleuenée Dividend) x 100 We Sass COPE Baoity Shasshaldass Fund * 200. Return _ Net Profit (After Tieeaeea “ Z® 7 1 / Vi! pa ‘Scanned ith CamSesnerfair f Tor 2 fatratiaa et at Gr aT ; liabilities side Methods from the following Example 9, frefefad sniis fag 3 Calculate the amount of gsseisand liabilities © Balance Sheet : =a Balance Sheet of Company Ltd. (as at Particulars Notes No.| Amount_ 1 EQUITY & LIABILITIES : x ‘1. Shareholders’ Funds + (a) Share Capital Equity Share Capital 1S 1,80,000 Pref. Share Capital 1,20,000 (b) Reserve & Surplus | General Reserve . . 1,60,000 Statement of Profit & Loss | 80,000 ‘Scanned ith CamSesner| | arya faye é 147 9, Non Non-eurrent Liabilities : bentures a oment L Tinbitities + . 1,00,000, ‘rade Payables: : unity Coss Creditors ac as 26,000 2,76,000 fa Payable ~ Z oo l/s Expenses >1'000 Total (1 + 2 + 3) ‘000 1. ASSETS + 1. Non-current Assets : (a) Fixed Assets : (i) Tangible Assets . Land & Building (Net) itaoo Plant & Machinery (Net) oe Furniture & Fitting p '50,000 (0) Investment | ——_—_—_——————————— 50,000 2. Current Assets : Inventory (Stock) 200,000 Trade Receivables : CS Sundry Debtors = 1,50,000 Tt BR . _45,000 1,95,000 Cash & Cash Equivalents : Cash at Bank 1,00,000 Cash is Hand 40,000 |__ 5,000 Prepaid Expenses Total (1 + 2) Solution : ae First Method : Assets side : A om Cy. Capital Employ: Fixed Asset nt, Assets — abilities aE z Land and Building 1,50,000 2,20,000 Plant and Machinery a Furniture and Fitting {one Stock. 00, Sundry Debtors — 150,000 Cash at Bank 1,00,000 Cash in Hand 40,000, Bills Receivable es 000 Prepaid Expenses S z 9,60,000 Less: Sundry Creditors ~ 1,80,000 BP ry crest * 96,000 80,000 Gn Boone 24,000 3,80,000 O/s Expenses ~~ Capital Employed € 5,80,000 in assets above. Note : Inves ‘umey to be Non-trading assets, so it is not cluded in ass ‘Scanned ith CamSesner148 wadhitst vezi ase Second Method : Liabilities side oo Capital Employed = Proprietor’s Fund + Fixed Liabilities - Fictitious and Non-trading z zt Assets Equity Share Capital 1,80,000 Pref. Share Capital 1,20,000 General Reserve 60, fatement of Profit and Loy 80,000 2 sure 1,00,000 Less: ~ Preliminary Exp. ———~ 10,000 Investment — 50,0005 7 600% Capital Bovey SHH Example 10. Following is the Balance Sheet of X Ltd: as at 31st Dec. 2012 : X. Ltd. Balance Sheet as at 31st Dec. 2012 Particulars Notes 1. EQUITY & LIABILITIES : —~ 1. Shareholders Funds: ~~ (a) Share Capital Equity Share Capital 8% Pref. Share Capital (b) Reserve & Surplus ~ Statement of Profit and Loss-(Including % 8,000 current years profit) Underwriting Commission 2. Non-current Liabilities : ~ 6% Debentures i 3. Current Liabilities : ——— | Sundry Credi II. ASSETS : 1. Non-current Assets: —~ (a) Fixed Assets : (i Tangible Assets Freehold Property Plant & Machinery Land & Building Furniture (ii) Intangible Assets Goodwill 2. Current Assets: © Inventory (Stock) ‘Trade Receivables (Debtors) Cash and Cash Equivalents : Cash at Bank Bank Overdraft ‘Total (1 + 2 + 3) Total (1 + 2) ‘The value of Land and Building will be € 90,000 and Plant and Machinery © 36,000- pou are rguired to calculate ; ss Capital Employed (2) Net Capital Employed (8) Avetage Capital Employed — ‘Scanned with CamScner% Solution : , 1. Gross Capital Employed = 1 Freehold Property 20,000 Plant & Mechinery (M. P.) 36,000 Land & Building (M. P.) . 90,000 Furniture 9,000 ly Stock 30,000 ¥ Debtors 16,000 te Gan at Bank 30,000 a : Gross Gapital Employed 51,000 Note : Goodwill and Underwriting Commission have not been taken into consideration for the ee calculation of capital employed. 2. Net Capital Employed = Gross Capital Employed ~ Current Liabilities = 2,31,000 - 20,000 = % 2,J4,000 3. Average Capital Employed = Capital Employed -3 (Current Years Profit) HAE (a) Gross Average Capital Employed = 2,31,000 - 3 (8,000) = 2,831,000 - 4,000 = % 2,27,000 (b) Net Average Capital Employed = 2,11,000 - } (8,000) = % 2,07,000 se ‘Scanned ith CamSesner