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Capital loss |
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Capital lossThe loss in value that the owner of an asset experiences when the price of the asset falls, including when the the currency in which the asset is denominated depreciates. Contrasts with capital gain.Capital lossThe difference between the net cost of a security and the net sales price, if the security is sold at a loss.Capital loss Similar MatchesCapital allocation decisionCapital allocation decisionAllocation of invested funds between risk-free assets and the risky portfolio. Return on capital employedReturn on capital employedA measure of a company's profitability. It may be defined as:Earnings before interest and tax divided by total capital employed plus short term borrowings minus total intangibles.ROCE takes all the assets employed in the business, including borrowings, and measures the return the company made on them. If a company has a low ROCE, it is using its resources inefficiently, even if its profit margin is high.Calculation: multiply operating profit by 100, and divide the result by total capital employedExample: Company A made an operating profit of £897m on total capital employed of £4,342m. ROCE was therefore (897 x 100) / 4,342= 20.66%Yardstick: A company's ROCE should be higher than the return on gilts (the benchmark for a risk-free investment return). And unless it is higher than the cost of borrowing, any increase in the company's borrowings or the general level of interest rates will reduce shareholders' earnings. A ROCE of 20% or more is considered very good. Long-term capitalLong-term capitalIn the capital account of the balance of payments, long-term capital movements include FDI and movements of financial capital with maturity of more than one year (including equities). Investment Company with Variable CapitalInvestment Company with Variable CapitalAn open-ended collective investment vehicle, similar to a unit trust. As with unit trusts, the money invested by savers is pooled, and then invested in the markets by professional fund managers appointed by the ICVC. The advantage to savers is that by putting their savings together with savings of other individuals, they get the benefits of diversification, and also of professional fund management. The difference between an ICVC and a unit trust is that an ICVC is a company rather than a trust. If you put savings into it, you have shares, not units. Also, an ICVC has just one price, whether you are buying or selling shares in it, with charges shown separately. Capital AssetsCapital AssetsAssets of a permanent nature used to produce income, such as machinery, buildings, equipment, land, etc. Must be distinguished from inventory. A machine which makes pencils, for example, would be a capital asset to a pencil manufacturer, but inventory to the company whose business is to sell such machines. Further SuggestionsContributed capitalCapital abundant Capital stock Marginal efficiency of capital Capital growth Leveraged recapitalization Capital gain Capital control Human capital Undercapitalized working capital capital allowance Financial capital Capital mobility Capital appreciation Efficient capital market Capital infusion capital adequacy Capital gains Capitalization table Capital account balance Capital flight authorised share capital Capital appreciation or depreciation Real capital |
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