|
Equity
Gearing
|
Shareholder's Funds |
|
CL + Total LT Loans +
Provisions & Minority Interests + SH Funds |
Benchmark: 0.6
Shareholders’ funds divided by total investment (shareholders funds, total short
term debt plus provisions).
Shows
how many times company worth covers its total debt.
Unlike
the gearing ratio, this accounts for money received on trade credit.
The
lower the ratio, the more highly geared the company, hence vulnerability to
changes in interest rates (see gearing, current ratio and quick ratio).
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