What is the formula for capital employed?

The correct formula for capital employed is derived from the financial structure of a business and is fundamental in assessing its efficiency and profitability. Capital employed typically represents the total amount of capital that is used for the acquisition of profits. In this context, it is calculated by adding total equity to non-current liabilities.

This combination is important because total equity represents the owner's claim on the company's resources and non-current liabilities represent the long-term financing that the company has access to. Together, these components reflect the total resources available for the company to generate revenue, thereby forming a foundational part of the company's capital structure.

Using total assets minus current liabilities is another method to assess liquidity and working capital management, but this doesn’t capture the complete picture of the capital employed as effectively. Other options focus on elements that do not accurately represent the total capital used in operations or may lead to misinterpretation of a company's financial health. Therefore, the option that combines total equity and non-current liabilities successfully identifies the total capital employed in the business.