Sir, I was under the impression that Gearing ratio = Non current liabilities/Share Capital reserves *100
I am attempting the below question from the ACCA practice exam = Z CO has long term loan liabilities of $324,000 and shareholders funds of $402,000. what is gearing ration.
possible ans = 19.4%, 55.4%, 124.1%, 44.6%
i was calculating by doing 324/402 *100
Please help
thanks
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Gearing
11y ago#1Gearing can be calculated in either of two ways.
It is either expressed as Long-term debt / equity (which is what you have done), or alternatively as long-term debt/(equity + debt)
Given the choices available, the question was expecting you to calculate the second way.
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