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    Question

    Capital gearing ratio is a fraction

    of:
    A Preference share capital and debentures to equity share capital and reserves and surplus Correct Answer Incorrect Answer
    B Equity share capital to preference share capital and long term debt Correct Answer Incorrect Answer
    C Equity share capital to total assets Correct Answer Incorrect Answer
    D long term debt to total assets Correct Answer Incorrect Answer
    E None of the above. Correct Answer Incorrect Answer

    Solution

    The capital gearing ratio shows how much ratio of outside capital is to equity shareholders’ funds. Outside capital includes long term debt and preference shareholders’ funds

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