Gearing 0.0 / 5 ? Business StudiesBusiness PlansA2/A-levelAQA Created by: nareen.lawkCreated on: 12-03-19 15:42 What is gearing? Gearing measures the proportion of a business' capital (finance) provided by debt 1 of 7 Why is the gearing ratio useful? Measures the financial health of a business and focuses on the level of debt 2 of 7 What does a high gearing ratio indicate? A great deal of leverage, a company is using debt to pay for its continuing operations 3 of 7 How do you calculate gearing (%) ? Non-current liabilities / Total equity + non-current liabilities X 100 4 of 7 What can you find on the income statement? Revenues, cost of sales, gross profit, operating profit and net proft 5 of 7 What can you find on the balance sheet? Current assets, current liabilities, inventories, trade receivables and payables and long-term liabilities 6 of 7 Why might ratio data not be entirely reliable? Info includes subjectivity, there is a potential for manipulation 7 of 7
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