final exam- gearing ratios

Question 1

gearing

Answer 1

a measure of how much debt there is in the capital structure of the company. these ratios will mostly interest debt providers e.g. bank managers

Question 2

gearing definition

Answer 2

what % of total finance is represented by debt? consider both short and long-term debt. Debt + equity = capital employed

Question 3

gearing equation

Answer 3

debt (NCL)/debt (NCL) + equity

Question 4

interest cover definition

Answer 4

is profit earned before interest sufficient to cover the interest due

Question 5

interest cover equation

Answer 5

profit before interest and tax/gross interest payables