Using the Formula Gearing Ratio = Long-Term Liabilities/(shareholders' Funds

question 43

Multiple Choice

Using the formula gearing ratio = long-term liabilities/(shareholders' funds + long-term liabilities) × 100/1, calculate the gearing ratio from the following information. Long-term liabilities are $18m; shareholders' funds are $14m.

• A) 44%
• B) 128%
• C) 78%
• D) 56%

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Definitions:

Japanese Yen

The official currency of Japan, represented symbolically as ¥ and known as one of the major currencies traded in the world.

South Korean Won

The official currency of South Korea, symbolized as KRW.

Full Employment

A situation in an economy where all available labor resources are being used in the most efficient way possible, typically characterized by very low unemployment.

Depreciates

Describes a decrease in value over time, often used in reference to currency or physical assets.