Hi sir,
there are many formulae to calculate ratios. I want to calculate using Debt/Equity. Should we take the total equity and total liability? because the liabilities includes provisions as well.
Provision for pension x
Deferrred tax liabilites x
Total non-current provision x
Non-current financial liabilites x
other non-current liabilites x
Total non-current liabilites x
Non-current provisions & llabilites x
Equity:
Issued capital x
Capital reserves x
Retained earnings x
Total equity x
So which are the items i must take to calculate the gearing?
Thank you...
Ask the Tutor ACCA FM
Gearing ratio
5y ago#1For the gearing ratio we use long-term liabilities just as in Paper FA (was F3). However in Paper FM it is more common to use market values of equity and long-term debt rather than the nominal values.
The calculations (and the implications) are all explained 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. You cannot expect me to type out all of my lectures here :-)
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