Question

What is debt ratio? In what ways it is different from capital gearing ratio?

Answer 1

Gearing ratios form a broad category of financial ratios of which the debt to equity ratio is the predominant example. Accountants, economists, investors, lenders and company executives all use gearing ratios to measure the relationship between owners' equity and debt. You often see the debt to equity ratio called the gearing ratio, although technically it would be more correct to refer to it as a gearing ratio.

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Answer 2

Explanation:

Gearing ratio measures the impact of debt on the capital structure and also assesses the financial risk due to additional debt. Effectively, gearing ratio is the broad category and debt/equity is one of the measures of gearing of the company.