gearing stuck..

topcat
topcat Registered Posts: 452
in AAT Level 4 (Level 8 in Scotland)
Not doing very well today at all!

How do you workout this particular gearing please? i would appreciated any help

My attempt was:

Total debt

total debt + equity

but i couldnt see that there was any equity? my answers were off by quite a bit

er8hd.jpg

Comments

  • topcat
    topcat Registered Posts: 452
    if anyone pops on here by tonight that would be handy as i have my exam tomorrow just looked at for another 30 mins and got no where :mad2:

    these are the answers just dont understand where they are coming from with no equity?
    • Debt/Equity x 100% = 100 and 89.47 for Scenario 1 and Scenario 2 respectively.
    However, the gearing may also be calculated as:


    Debt/(Debt plus Equity) = 50 and 47.22 for Scenario 1 and Scenario 2 respectively
  • topcat
    topcat Registered Posts: 452
    hell yea, finally sussed it fourth time lucky

    Total debt

    total debt + net assets

    as net assets = equity
    since assets - liabilities = equity /capital

    feel as though i have cracked the da vinci code ( i know it was probably easy for everyone else though)

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