Why should potential investors consider the gearing ratio during their initial investment?

A general term describing a financial ratio that compares some form of owner's equity (or capital) to borrowed funds.
Gearing is a measure of financial leverage, demonstrating the degree to which a firm's activities are funded by owner's funds versus creditor's funds.
A company with high gearing (high leverage) is more vulnerable to downturns in the business cycle because the company must continue to service its debt regardless of how bad sales are.
A greater proportion of equity provides a cushion and is seen as a measure of financial strength.