The gearing ratio measures the percentage of capital employed that is financed by debt and long term finance. The higher the gearing, the higher the dependence on borrowings and long term financing. The lower the gearing ratio, the higher the dependence on equity financing. Traditionally, the higher the level of gearing, the higher the level of fin
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In a simple example, if a company has 100 million of total assets and 13 million of borrowings, shareholders' funds are 87 million. If the total assets grow or fall by 10% to 110million or 90million, and the borrowings remain the same at 13 million, the shareholders' funds grow to 97 million or fall to 77 million. This is an increase or decrease in
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Ratio of a company's permanent loan capital (preference shares
and long-term loans) to its equity (o
Found on http://www.encyclo.co.uk/local/20688
A general term describing a financial ratio that compares some form of owner's equity (or capital) to borrowed funds. Gearing is a measure of financial leverage, demonstrating the degree to which a firm's activities are funded by owner's funds versus creditor's funds.
Found on http://ir.telecomegypt.com.eg/Glossary.html
Gearing ratio refers to the fundamental analysis ratio of a company`s level of long-term debt compared to its equity capital. The point when processing what amount of debt an organization is undertaking as contrasted with its equity, the debt to equity ratio is generally utilized. Debt to equity ratio is the sum contract taken by the organization.
Found on http://en.wikipedia.org/wiki/Gearing_ratio
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