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    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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