|
Hi Cathrine
In order to work out the percentage gearing you divide the prior capital (preference shares, debentures/long term loans) by the total capital (ordinary shares + reserves + preference shares and debentures) then x 100
For example, a company has
ordinary shares £50000
debentures - £40000
preference shares £10000
capital gearing is:
(10000+40000) x100
(10000+40000+50000)
=50000 x 100
100000
= 50%
As for your particular mock, I am not sure it is a while since I have done it!
Edit - I have just checked my mock and what have written here is still right - I have added in the word "reserves" to the total capital calculation above though, as although it is not in my example above, it is in the mock question from when I took the mock exam!
Edited at 08 Mar 2012 10:01 AM GMT
|
