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P3 questions

JLjihun lee8y ago
1. When we get gearing ratio Isnt Debt / equity or debt / (debt + equity) ? ? But y revision kit uses Long term debt / capital employed ? 2. Sometimes scenario tells us to analyze the ratio and how kniw whether to use debt / equity or debt / (debt+equity) ? ?
kengarrettkengarrettTutor8y ago#1
Use either formula, but be consistent between the years. Capital employed=Equity + Long term debt.
JLjihun lee8y ago#2
But what if scenario use one of the formula and doesnt indicate which one and but i have to calculate the other firm's gearing ratio ? So which one do i habe to use
kengarrettkengarrettTutor8y ago#3
Use the one that gives you the answer in the scennario if a figure is given. Otherwise, use whichever you want to.
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