What is the formula for capital employed?

Capital employed is a measure of the total resources available to a business for earning profits. The correct formula for capital employed is typically understood as total assets minus current liabilities or alternatively as the sum of equity and non-current liabilities. This option reflects the idea that capital employed consists of the funds provided by the long-term financing sources available to a business, including equity and long-term debt (non-current liabilities).

Understanding this concept is crucial as it illustrates how much capital is actively used in the operation of the business and available to generate returns. The other options do not accurately reflect the definition of capital employed, making them less relevant in this context.