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Gearing

This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.

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June 15, 2016 at 10:31 am #323016
anu1234
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Does low gearing means a higher percentage of companys capital is sourced from outside ? and therefore it will result in higher interest payment
June 15, 2016 at 5:11 pm #323074
John Moffat
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No – quite the opposite!!
Low gearing means less of the finance is from long-term loans, and therefore there will be a lower interest payment.
Look again at the definition of the gearing ratio in the lectures!!
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