Please explain me whether the capital employed includes short term loan or not (for computation of equity and debt ratio)
I found that:
assets side:
Capital employed= FA+ NET Working Capital (excluding fictitious assets, misc. expenses)
liability side:
Capital employed= shareholders fund + debenture+ loan(both short and long)
But the asset side approach is not considering the short term loan(because current liability includes short term loan and net working capital = CA-CL)
Please tell me the reason of this contradiction
or
Am I making any mistakes?
Thank you!
I found that:
assets side:
Capital employed= FA+ NET Working Capital (excluding fictitious assets, misc. expenses)
liability side:
Capital employed= shareholders fund + debenture+ loan(both short and long)
But the asset side approach is not considering the short term loan(because current liability includes short term loan and net working capital = CA-CL)
Please tell me the reason of this contradiction
or
Am I making any mistakes?
Thank you!