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

question 4

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 $18m, Shareholders' funds $14m.

• A)128%.
• B)56%.
• C)78%.
• D)44%.

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