URGENT HELP - DFS Gearing Ratio Debt/Equity

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:26AM in AAT student discussion
Can anyone help? I'm having a last minute panic.

Are preference shares included in equity?

I know it is
Debt (inc Preference shares)
divided by
Equity

But what is the equity
OSC+Share Premium+Reserves+retained earnings - but does it also include preference shares.

I thought it did, but the one question i could find in osbourne books didn't include it.

Please someone help.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:URGENT HELP - DFS Gearing Ratio Debt/Equity

    I don't really know the difference between preference shares and ordinary shares so for the equity figure I take the total at the bottom of the balance sheet - hope this helps!!

    I will be looking at gearing again - it was in this months aat magazine so i have a feeling it may be on the exam!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:URGENT HELP - DFS Gearing Ratio Debt/Equity

    Hey, don't worry i found it in the book (Page 205 osbornes).

    Equity does NOT include Preference shares.

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:URGENT HELP - DFS Gearing Ratio Debt/Equity

    This link might help:

    http://www.tutor2u.net/sub_accounting.asp

    Helen

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