Question

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

Answer 1

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

Answer 2

Answer:

Mate u have got ur answer

and the answer is correct