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Good day sir,
Can I enquire about what is the reason behind using debt ratio to measure capital structure?? since I read a lot of journal article, it did so.
because as I know capital structure measurement should be using debt-equity ratio
Tq
We use the gearing ratio which can either by measured as debt/equity, or alternatively as debt/(debt + equity).
Either measure can be used when discussing capital structure unless, obviously, the examiner specifically states which way he wants it measured.
As to the relevance of the ratio, it is all explained in detail in my free lectures. The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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