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Opentuition chapter 9 – gearing

This topic has 1 reply, 2 voices, and was last updated 8 years ago by Ken Garrett.

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August 27, 2014 at 8:36 pm #192574
marky123
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Hello John,

I’m working through chapter 9 on the example 1 review of Repse Plc.

Please could you advise me how (in the standard answer) you arrive at the “book values” percentages in the gearing analysis (yr 1 – 50%, yr2 34.6% etc)

I’m sure the answer is staring me in the face but I can’t get to it!!

Many thanks
Marky
August 29, 2014 at 1:26 pm #192921
Ken Garrett
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Gearing = Long term debt/equity [ie shareholders’ funds]

Year 1 = 11,300/22,600 = 50% Year 2 = 9,000/26,000 = 34.6%
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