If debt is 220 cash balance is 20 and equity is 300 then the gearing r

1.	If debt is 220 cash balance is 20 and equity is 300 then the gearing ratio isAnswer is 40 please explain how?
Answer» Answer: Answers4u Genius In this case, gearing ratio = (220/300) = 0.73 which is a good gearing ratio. Any financial ratio which highlights the EFFICIENCY of a business in utilising borrowed FUNDS come into the category of gearing ratios. The total AMOUNT of DEBT is divided by equity capital to find the gearing ratio of a business. Examples of gearing ratios – Interest EARNED ratio = ( earning before income tax/total interest). Debt-equity ratio = ( total debt/ total equity). Debt ratio = (total debts/total assets). Equity ratio =(total equity/total assets

If debt is 220 cash balance is 20 and equity is 300 then the gearing ratio isAnswer is 40 please explain how?

Answer»

Answer:

Answers4u Genius

In this case, gearing ratio = (220/300) = 0.73 which is a good gearing ratio.

Any financial ratio which highlights the EFFICIENCY of a business in utilising borrowed FUNDS come into the category of gearing ratios. The total AMOUNT of DEBT is divided by equity capital to find the gearing ratio of a business.

Examples of gearing ratios –

Interest EARNED ratio = ( earning before income tax/total interest).

Debt-equity ratio = ( total debt/ total equity).

Debt ratio = (total debts/total assets).

Equity ratio =(total equity/total assets

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