Home For AAT student members AQ 2016 Professional Diploma in Accounting Management Accounting: Decisions and Control

Workbook Question 5.2 (Osbourne Books)

Hi all, could someone please explain how to work out the Gearing Ratio % for the question above. Thanks in advance.

Comments

  • Emmalouise18Emmalouise18 Registered Posts: 234
    Gearing ratio is..

    Debt x 100 / Debt + Equity.

    Cannot see any question above though? :)
  • John_ClyneJohn_Clyne Registered Posts: 26
    Hi Emma, I was referring to the question in the title in the hope someone currently studying the module was using the same resource. Maybe I can post the question later :)

    I'm sure my book describes the formula as:

    (Debt / Debt + Equity) x 100

    Perhaps its a typo by Osborne.
  • Fee2019Fee2019 Registered Posts: 25
    I have always used the (Debt / Debt + Equity) x 100 formula :)
  • Pian32Pian32 MAAT Posts: 337
    edited February 2020
    The 2 formulae are functionally the same the x 100 can go on the top of the fraction or after the whole thing.

    You could even do:

    (100/(Debt+Equity)) x Debt or (1/(Debt+Equity)) x Debt x 100

    Unfortunatly I don't have my osborne books on hand at work anymore so can't see the question.


    I will add that written convention would have it as

    (Debt/(Debt+Equity)) x 100

    This is simply because the x 100 just converts the decimal ratio to a percentage
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  • Emmalouise18Emmalouise18 Registered Posts: 234

    Hi Emma, I was referring to the question in the title in the hope someone currently studying the module was using the same resource. Maybe I can post the question later :)

    I'm sure my book describes the formula as:

    (Debt / Debt + Equity) x 100

    Perhaps its a typo by Osborne.


    Hi John,

    Sorry but I don't have the text book so unsure of the exact question. I believe both formulas work but I always used debt x 100 / debt + equity.

    Thank you
  • WinaniWinani Registered Posts: 4
    those are the figures @Emmalouise18
  • WinaniWinani Registered Posts: 4
    those are the figures @Emmalouise18
  • WinaniWinani Registered Posts: 4
    those are the figures @Emmalouise18
  • WinaniWinani Registered Posts: 4
    the file wont upload i dont know why @Emmalouise18
  • Vero55Vero55 Registered Posts: 1
    > @John_Clyne said:
    > Hi all, could someone please explain how to work out the Gearing Ratio % for the question above. Thanks in advance.

    Hey did you ever find out the answer to this? I'm stuck on the exact same question and I can't understand how they've worked it out?
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