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gearing ratio(debt:Equity)

This topic has 3 replies, 3 voices, and was last updated 8 years ago by mrjonbain.

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February 1, 2017 at 7:20 pm #370643
reosarogi
Member
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If a question says gearing ratio(debt:equity) is 0.6 does it mean debt is 60 and equity is 40 or debt is 60 and equity is 100
February 2, 2017 at 7:41 am #370712
John Moffat
Keymaster
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Debt 60 and equity 100 (otherwise debt/equity does not equal 0.6 !!!)
February 2, 2017 at 4:19 pm #370787
reosarogi
Member
- Topics: 5
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thanks
February 2, 2017 at 6:42 pm #370823
mrjonbain
Moderator
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Good example of how ratio analysis generally doesn’t involve ratios.In above case ratio debt to equity would be 3:2.
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