Gearing Ratio
sexyback
Registered Posts: 13 New contributor ๐ธ
Please help
Can anyone explain Gearing Ratio
Thanks
S
Can anyone explain Gearing Ratio
Thanks
S
0
Comments
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i remember it as D.E.A.D
Debt
equity and debt
i remember highly geared is a problem and you have more debt than money in the business.
i think:confused1:0 -
gearing = loan/loan + equity X100
If over 50 high geared
If lower than 50 low geared0 -
Thanks this really helped me in PEV June 2008 :001_smile:0
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Don't - the one I had to learn for my exams last week was Net Debt/Equity - you had to adjust for cash at bank!:huh:0
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hi sexyback
gearing formula is debt/debt +equity
it shows how much of the business is financed by debt . imagine a business being financed 100% by loans?!! lol. anyway usually a low gearing is better . but the acceptable differs from industry to industry . for eg 60% gearing may be way too much for a small store . but ok for a steel mill.0 -
i 4got one thing
another formula is debt/equity. either of the formaula may be used in the exam .just make sure you write the formula so the assessors can easily know which one u used .0
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