Gearing Ratios
Definition 1.
A general term given to leverage ratios that express the capital for a firm.
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Measuring Gearing
Checklists
The three most common examples of gearing ratios are: ...
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Gearing Ratio
A general term describing a financial ratio that compares some form of owner's equity (or capital) to borrowed funds.
The gearing ratio is calculated by dividing net debt by share capital.
Goodwill
Goodwill is the difference between the buying price of a company and the net value of the subsidiary after re-evaluation.
Finally, the gearing ratio indicates how a company finances the assets it holds or more precisely the amount of assets per dollar of shareholder/stockholder equity investment in the company.
So a company with a gearing ratio of 60% has levels of borrowing which are 60% of its equity capital.
The gearing ration expresses this as a percentage. Therefore, a company with a gearing ratio of 60% has levels of borrowing equal to 60% of its equity capital.
Debt to equity is the commonest type of gearing ratio. There are three basic variations on this ratio:
long term debt ÷equity
total debt ÷equity
net debt ÷equity ...
The higher the gearing ratios, the more critical is the company's financial situation and the more vulnerable it is to bankruptcy. The term gearing may also refer to the ratio between ordinary shares and preference shares in the company's equity.
 See also: Gearing, Capital structure, Banks, Equity capital, Equity cap
  
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