June 2010 Q2 – Gearing

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  • Avatar of marky123
    marky123
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    Hi John,
    Just worked through your lecture for this question.

    In part (c) (ii) we are asked to calculate gearing, and the current gearing is zero?

    Am I missing a trick? Gearing is Debt over Equity so surely current should be 5,200/17,000 which would be 30.6% ??

    I note that your answer and ACCA’s answer states zero, but why?
    Cant seem to spot it anywhere!!

    Thanks in advance


    Avatar of johnmoffat
    John Moffat
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    The 5200 is trade payables – they are not part of gearing.
    Gearing is the level of long-term debt borrowing and currently there are no non-current liabilities.


    Avatar of marky123
    marky123
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    Thanks John.


    Avatar of johnmoffat
    John Moffat
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    You are welcome :-)

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