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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › gearing when equity is negative
Hi,
i got this confused. when the equity of an entity shows negative balance due to retained losses, what happens to the gearing? will we use negative equity and get negative gearing(preferably debt/equity)?
thanks
You would show a negative figure, but it would be pretty meaningless. It doesn’t ever happen in the exam!
