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Does the term financial gearing always imply that market values are to be used nd debt equity ratio should be calculated using book values?
Financial gearing is best measured using the market values (debt equity ratio is one way of measuring gearing).
The examiner usually specifies which measure of gearing he wants (debt to equity, or debt to debt + equity) and also whether he wants you to use market values or book values (most often in the exam it is book values).
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