Invested Capital

Invested capital represents the total cash investment that shareholders and debtholders have made in a company. There are two different but completely equivalent methods for calculating invested capital. The operating approach is calculated as:

Invested capital = operating net working capital + net property, plant & equipment + capitalized operating leases + other operating assets + operating intangibles − other operating liabilities − cumulative adjustment for amortization of R&D

Equivalently, the financing approach is calculated as

Invested capital = total debt and leases
+ total equity and equity equivalents
non-operating cash and investments

In symbols:

Invested capital is used in several important measurements of financial performance, including return on invested capital, economic value added, and free cash flow.

Other articles related to "invested capital, capital":

Invested Capital - Approach - Financing Approach
3,500 Common stock 600 Additional paid-in capital 1,900 Retained earnings 1,500 Bad debt reserve 200 LIFO reserve 500 Capitalized R D expense 1,000 Capitalized marketing expense 300 Total equity and equity ...
Stock Valuation - Fundamental Criteria (fair Value)
... risk premium which is commonly based on the capital asset pricing model ... Return on Invested Capital (ROIC) ... how much money the company makes each year per dollar of invested capital ...

Famous quotes containing the words capital and/or invested:

    Capital is money, capital is commodities.... By virtue of it being value, it has acquired the occult ability to add value to itself. It brings forth living offspring, or, at the least, lays golden eggs.
    Karl Marx (1818–1883)

    Young women especially have something invested in being nice people, and it’s only when you have children that you realise you’re not a nice person at all, but generally a selfish bully.
    Fay Weldon (b. 1933)