ECONOMICS

Detailed explanation-1: -A gearing ratio is a general classification describing a financial ratio that compares some form of owner equity (or capital) to funds borrowed by the company. Net gearing (as a debt-to-equity ratio) can also be calculated by dividing the total debt by the total shareholders’ equity.

Detailed explanation-2: -What Is Debt-to-Equity (D/E) Ratio? Debt-to-equity (D/E) ratio is used to evaluate a company’s financial leverage and is calculated by dividing a company’s total liabilities by its shareholder equity. D/E ratio is an important metric in corporate finance.

Detailed explanation-3: -The Debt to Equity ratio (also called the “debt-equity ratio”, “risk ratio”, or “gearing”), is a leverage ratio that calculates the weight of total debt and financial liabilities against total shareholders’ equity.

Detailed explanation-4: -Accountants, economists, investors, lenders, and company executives all use gearing ratios to measure the relationship between owners’ equity and debt. You often see the debt-to-equity ratio called the gearing ratio, although technically it would be more correct to refer to it as a gearing ratio.

Detailed explanation-5: -Debt-to-total assets ratio (debt-to-total capital ratio) The debt-to-total-assets ratio shows how much of a business is owned by creditors (people it has borrowed money from) compared with how much of the company’s assets are owned by shareholders.