a bit of advice - gearing ratio

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fez
fez Registered Posts: 1 New contributor 🐸
in General accounting discussion
I have been asked a question regarding the gearing ratio, and am slightly unsure of the answer.

Within the capital employed part of the equation, does one include the value for a 'merger reserve' that is shown within the Capital and Reserves figures reported on the balance sheet?

Apologies if this question has been answered before.
(It's quite urgent!)

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  • jamesm96
    jamesm96 Registered Posts: 523
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    fez wrote: »
    I have been asked a question regarding the gearing ratio, and am slightly unsure of the answer.

    Within the capital employed part of the equation, does one include the value for a 'merger reserve' that is shown within the Capital and Reserves figures reported on the balance sheet?

    Apologies if this question has been answered before.
    (It's quite urgent!)

    I don't see why'd you'd exclude it, it's in equity on the balance sheet! Presumably you want the figure to look as healthy as you can, so unless the form you're completing / person you're responding to specifically said 'only include retained earnings and share capital' (or words to that effect) I'd include it.

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