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Gearing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Gearing

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.
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  • October 16, 2018 at 6:40 pm #478816
    firelion28
    Member
    • Topics: 159
    • Replies: 83
    • ☆☆☆

    Hey john
    In the bpp revision kit question on mercury- it says that the average market gearing (debt to total market value) is estimated to 25%

    Now my q is debt should be 25 and as total market value is market value of company which is equity so equity is 100
    But they have written equity has 75?
    Why? Thanks

    October 17, 2018 at 6:47 am #478870
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54664
    • ☆☆☆☆☆

    The total market value is debt plus equity – not simply equity.

    I do stress this in my free lectures.

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