Invested Capital

AAA

DEFINITION of 'Invested Capital'

The total amount of money that was endowed into a company by the shareholders, bondholders and all other interested parties. Invested capital is often determined by adding the total debt and lease obligations to the amount of equity in the firm and then subtracting the non-operating cash and investments. Invested capital must be calculated, and there are multiple ways to calculate this figure. It will not be listed on the company's financial statement.

INVESTOPEDIA EXPLAINS 'Invested Capital'

Companies must earn more than it costs them to use the invested capital provided by bondholders, shareholders and other financing sources, in order to earn an economic profit. Knowing a company's invested capital allows investors to use this metric to calculate measures of performance such as return on invested capital, economic value added and return on capital employed.

RELATED TERMS
  1. Return On Equity - ROE

    The amount of net income returned as a percentage of shareholders ...
  2. Collateralized Loan Obligation ...

    A security backed by a pool of debt, often low-rated corporate ...
  3. Return On Capital Employed (ROCE)

    A financial ratio that measures a company's profitability and ...
  4. Capital

    1) Financial assets or the financial value of assets, such as ...
  5. Economic Value Added - EVA

    A measure of a company's financial performance based on the residual ...
  6. Asset

    1. A resource with economic value that an individual, corporation ...
Related Articles
  1. Find Quality Investments With ROIC
    Options & Futures

    Find Quality Investments With ROIC

  2. Understanding Economic Value Added
    Markets

    Understanding Economic Value Added

  3. How do you calculate retained earnings ...
    Fundamental Analysis

    How do you calculate retained earnings ...

  4. What qualifies as
    Savings

    What qualifies as "goods" in cost of ...

Hot Definitions
  1. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  2. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  3. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center