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The capital gearing ratio measures the extent to which a company's long-term finance has been provided by shareholders rather than lenders. True or false?

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Question added by Deleted user
Date Posted: 2013/09/03
Ahmed Mohamed Abdel Latif Abdel Wahed
by Ahmed Mohamed Abdel Latif Abdel Wahed , Finance Manager , Al Babtain Trading

false/ because the capital earning ratio measure earning share but the ratio that measure range of company depend on external financing is debit ratio.

 

Virendra Rathore
by Virendra Rathore , Senior Executive Accounts , Impetus Infotech India Private Limited

False , Because Capital gearing ratio shows a relation between shareholder's fund and lender's fund. It does not concentrated only on shareholder portion. 

 

What Capital Gearing Stands for :- Analyzing capital structure means measuring the relationship between the funds provided by common stockholders and the funds provided by those who receive a periodic interest or dividend at a fixed rate.

 

 

Crux is :-

Highly geared>>>Less common stockholders’ equity

Low geared>>>More common stockholders’ equity

 

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