What is meant by the term 'gearing'?

Gearing is expressed as a percentage and shows how much capital a business borrows. A company which is highly geared typically has a rate of higher than 50%, whilst a low geared business will have a gearing rate of less than 25%. Gearing is calculated by dividing long term loans (loans which you owe for 12 months or more) divided by equity, X100 (%).

EY
Answered by Emma Y. Business Studies tutor

2030 Views

See similar Business Studies A Level tutors

Related Business Studies A Level answers

All answers ▸

What is Customer Service and why is it important for a business?


Analyse how delayering might affect the level of profit of a business


What is Ansoff's Matrix? Name and explain the 4 aspects.


Analyse the benefits for a national firm of a government adopting protectionist trade policies?


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences