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Gearing Ratio

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Description

A financial ratio that compares some form of owner equity (or capital) to borrowed funds.

The gearing ratio is a financial metric that compares a company’s debt to its equity, showing how much of its operations are funded by borrowed money versus shareholders’ equity. A high gearing ratio indicates higher financial risk due to increased debt levels, which could amplify both gains and losses. It’s an essential measure for assessing a company’s leverage and financial stability.

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