Gearing | Practical Law

Gearing | Practical Law

Gearing

Gearing

Practical Law UK Glossary 0-107-6640 (Approx. 4 pages)

Glossary

Gearing

Also known as the debt/equity ratio or leverage. The ratio of debt (borrowings) to shareholder funds (broadly, share capital and retained profits), often expressed as a percentage or ratio. It is often used as a measure of the risk attached to a company because a highly-geared company has a large interest burden which has to be met whether or not profits are made.