Chapter 37, Gearing ratios Flashcards
1
Q
Gearing ratio
A
considers the level of risk for a business
non-current liabilities / capital employed x 100
2
Q
Debt to equity ratio
A
compares long-term liabilities with share capital and retained profit
Debt / equity x 100
3
Q
Interest cover
A
help decide if a business can afford to repay a loan
operating profit / interest payable (finance costs)
