# Gearing Ratio Assignment Help

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## Gearing Ratio Assignment Help

Financial statements are prepared mainly for the purpose of decision making. They play an important role in the management decisions of an organization. But the financial statements alone cannot serve the purpose of decision making until these financial statements are properly analyzed and interpreted. Financial ratio analysis is a method to identify the financial strength and weakness of an organization through the establishment of a relationship between balance sheet items and profit and loss account. Amongst the various methods utilized for analyzing financial statements, ratio analysis is the most powerful method. One of the financial ratios is the Capital Gearing ratio and the Accounting students often given assignments on this topic, for which students take the academic writing service of BookMyEssay. Gearing ratio topic is not easy to learn without external assistance, which compels the students to take Gearing Ratio assignment Help.

Our professional experts at BookMyEssay are excellent in analyzing ratios and also in interpreting them. The absolute figures of the financial statements could be misleading if they are not compared with another. Our Gearing Ratio assignment help will be a great aid for the students in computing the ratio and its analysis. Our team will guide you to understand this ratio properly and further how to calculate and interpret it. Gearing ratio Statements hold importance for the financiers, analyzers, and students in the finance and allied field. Studying finance subject is not so easy and solving balance sheets of an organization is an arduous task due to the increase in complexity of the asset values over the years. But, now with the easy access to online solutions for homework and assignments, students can easily solve the assignment on capital gearing.

## The Gearing Decision of a Company

Gearing ratio is the percentage of the contribution of owner’s equity to the borrowed funds. The ratio determines how the amount that is contributed to the business by the owner of the borrowed funds. Capital gearing ratio is calculated to judge the long-term solvency of a firm. The formula of gearing ratio is:

Capital gearing ratio= Fixed interest-bearing securities/Equity Shareholder’s fund

Fixed-interest bearing securities are preference share capital, long-term loans, and debentures that carry fixed interest rate and dividend.

Different kinds of gearing ratios are used for calculating the financial leverage of the company. The two common ways are:

1. Long-term debt to total equity or
2. Long-term debt to long-term debt plus total equity

By using any one of the above formulas, gearing ratios are calculated, it says the ratio the firm is funded by the creditors.

The risk is more for a firm if the ratio is higher as there is a fixed commitment to pay the interest before distributing the profits to the equity shareholders. The standard capital gearing ratio is 1. If the gearing ratio is 1, then the firm is evenly geared. If the ratio is higher than 1, it is highly geared, which means the major part of the funding is by way of fixed interest-bearing securities. If the gearing ratio is lower than 1, then it is low geared firm.

Gearing ratios are highly important for the business as a tool for financial analysis. It can comprehend the financial position of the firm and analyze if the firm can return its liabilities or not. This ratio when used alone in accounting is of no use but useful only when compared to other ratios.  It evaluates the soundness and the financial position of the business in the long run.

Understanding the income statement relating to a business is important. Students sometimes find it difficult to comprehend every item of the income statement, hence take Gearing Ratio assignment writing help from BookMyEssay.

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BookMyEssay is the best place to clear all your doubts regarding gearing ratio along with examples. We have a vast team of experienced financial management experts who can explain different concepts of financial ratios in an effective manner. You can submit us the college and university assignments and we ensure to give you the best Gearing Ratio assignment help. The reasons to avail our services include the following:

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