Yahoo Answers is shutting down on May 4th, 2021 (Eastern Time) and beginning April 20th, 2021 (Eastern Time) the Yahoo Answers website will be in read-only mode. There will be no changes to other Yahoo properties or services, or your Yahoo account. You can find more information about the Yahoo Answers shutdown and how to download your data on this help page.
gearing ratio formula
What is the formula to calculate gearing ratio ? Explain.
- 1 decade agoFavorite Answer
The gearing ratio = long term debt / total shareholder's equity
This ratio indicate the capability of the company to meet its long term debt obligation. Normally, high gearing ratio is not preferred as the company may have difficulty to repay its debts. However, for some rapid growth industries with low market interest rate, high gearing ratio may be good because the company can make use of "low cost loan" to rapidly develop its products and capture more market shares.Source(s): 永柏會計有限公司 (Win Plus Accounting Limited)