Credit Management Gearing - Help please!

lucym96

Hello!

This is my first time posting in here... usually I can find the answers I need already discussed but as I am asking about a AQ2016 sample assessment I don't think anyone has asked yet.

Wondering if anybody could help with credit management CDMT Sample Assessment 1

On task 2, ratio analysis it has asked for gearing (gearing = total debt/debt + equity)

So we are given various figures but essentially the ones I need are:

Non current liabilities (borrowing) = £2000
Total Equity = £1964

So to me it would be
2000/2000+1964 x 100% = 50.45

Now the answers say it should be 51.79

Am I missing something?

Sorry if it is something really obvious... not sure how to copy the rest of the question across as maybe it is the other figures I am missing.

If someone could help it would be much appreciated as my exam is Thursday!!

Thanks in advance
Lucy

N4T

Total debt is long and short term debt. You need to include the loan of £110 under current liabilities to the equation.

lucym96

Sorry definitely missed that - lesson learnt ha!

Thank you

Mike Webster

Total debt is any interest bearing debt (short & long term loans, overdrafts)

lucym96

Thank you - I was only included long term loans and not the short term!

Silly mistake.