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      Question

      Which of the following best describes ‘capital gearing

      ratio’?
      A Ratio of liquid assets to inventory Correct Answer Incorrect Answer
      B Ratio of fixed interest bearing capital to shareholders’ equity Correct Answer Incorrect Answer
      C Ratio of current liabilities to current assets Correct Answer Incorrect Answer
      D Return on capital employed Correct Answer Incorrect Answer
      E Debt service coverage ratio Correct Answer Incorrect Answer

      Solution

      Capital gearing measures the degree of financial leverage.

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