Question

Capital Gearing 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 and Reserves and Surplus to Preference Share Capital and Debentures Correct Answer Incorrect Answer
C Equity Share Capital to Total Assets Correct Answer Incorrect Answer
D Total Assets to long term debt Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

Capital gearing ratio signifies how much equity capital (owners’ capital) is geared towards outside capital (which includes preference share capital also).

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