gearing ratio

An accounting ratio which measures the level of debt finance a company has raised relative to its level of shareholders' funds, also known as the debt to equity ratio. It is usually defined as debt divided by shareholders' funds, expressed as a percentage. The precise definition will vary, however, from situation to situation. The higher the percentage from the calculation, the more highly geared a company is. It is possible to calculate the net gearing ratio, where cash balances are deducted from debt in the calculation. Dresdner Kleinwort Wasserstein financial glossary
See also interest cover and gearing. Dresdner Kleinwort Wasserstein financial glossary

Financial and business terms. 2012.

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