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Hi John,
I’ve been doing some practice questions on ratios and I’m understanding most of them except the gearing ratio.
How come sometimes we do Debt/Equity but other times we do Debt/Debt & Equity?
It’s frustrating because I do it one way and the answers do it the other. Is this something we would be marked down for, or will the examiner specify which I should use? In one of your lecture examples, the question stated which method to use, so I understood that.
Thanks and sorry for being a pest!
Sophie
Both are standard measures and so usually the examiner specifies which one he wants.
If he doesn’t specify then you will get the marks for using either.
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