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1. When we get gearing ratio
Isnt
Debt / equity or debt / (debt + equity) ? ?
But y revision kit uses
Long term debt / capital employed ?
2. Sometimes scenario tells us to analyze the ratio and how kniw whether to use debt / equity or debt / (debt+equity) ? ?
Use either formula, but be consistent between the years.
Capital employed=Equity + Long term debt.
But what if scenario use one of the formula and doesnt indicate which one and but i have to calculate the other firm’s gearing ratio ? So which one do i habe to use
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