Gearing Flashcards
(6 cards)
1
Q
what does gearing measure ?
A
it measures risk. the ratio of borrowed to internal long term finance
2
Q
what is the financial structure formula ?
A
long term debt/ total capital employed x 100
3
Q
what is the interpretation of the financial structure formula ?
A
over 50% is risky means you have more external debt that equity
4
Q
what is the interest cover ratio formula ?
A
operating profit/ interest
5
Q
what is the interpretation of the interest cover formula ?
A
6
Q
A
