Borrowed Capital as a Percentage of Capital Employed FAQs
Borrowed capital is the money borrowed from an outside source. This includes long-term loans, debentures, and others. It shows what portion of the total capital used is provided by outsiders (i.e., entities other than ordinary shareholders who are the real owners of the company).
Borrowed capital is used in credit analysis and similar financial research. It can help investors determine if a company has sufficient funds to run its business, for example.
This is the firm's total borrowed capital, divided by its total capital employed. It can be calculated using information found in a company's annual report (10-K form).
Borrowed capital as a percentage of capital employed is one of the major Financial Ratios that credit analysts use to determine a company's creditworthiness. It can help you assess whether or not their cash position is strong enough to meet its short-term and long-term obligations.
The formula for orrowed capital as a percentage of capital employed is: borrowed capital / capital employed = borrowed capital as a percentage of capital employed equation
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.