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How is capital employed different from capital invested?

Capital employed refers to the amount of total capital a firm has in its pockets. Whereas, Invested capital is the amount of capital that is being used in business operations. Capital employed is a more inclusive term than the invested capital. It looks over the total equity and debt financing after deducting the short-term liabilities. On the other hand, Invested capital focuses more on the ROI in context to the capital being used in the business.

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