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gearing = interest bearing debt / (equity+interest bearing debt)
this interest bearing debt includes only long term debt or does it also include bank o/d?
That depends on whether the overdraft is in the nature of fluctuating short term borrowing or has it been around for some time (years?) and always around the same level.
If it’s part of working capital management strategy, probably not include in “interest bearing debt”. If it’s a long term overdraft position, probably treat it as interest bearing debt
It also depends on who is analysing the figures, and what for
But it hardly matters does it? So long as you’re consistent and the percentage / fraction / ratio that you arrive at is comparable, then what difference does it make?
hmmm….let me absorb this then will ask any follow up if i have it…thank u
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