Invested capital

The money tied up in running the business, provided by shareholders and lenders, less spare cash.

Formula

Invested capital = Shareholders' equity + Total debt − Cash and short-term investments

Worked example

1. Shareholders' equity = $8.0bn
2. + Total debt = $5.0bn
3. − Cash & short-term investments = $2.0bn

Result: $11.0bn

How to read it

This is the financing approach; analysts sometimes build it up from operating assets instead, which gives a similar figure.

Worked example uses made-up figures for 'Example plc'

See it with real numbers: Any company page → (free account)