![]()  You’ll see how income statements and balance sheets work and you’ll also understand key financial jargon, concepts and commonly used financial metrics. You will learn how businesses are funded and what the money’s used for how they make profits and generate cash how to measure business performance where to find the information you’ll need. In the US, gearing is referred to as leverage.īreak down the jargon barrier further with one of our online courses: The Basics of Business Finance – Essentials Online Course This course is designed to give you a good understanding of the basics of business finance. Gearing can also be calculated as the ratio of debt to debt plus equity or the ratio of equity to total assets or debt to EBITDA. ![]() The gearing ratio shows the amount of money borrowed in relation to the equity (or the shareholders' funds). Gearing is associated with risk because it increases the volatility of profits - and because the lenders have first call on profits. Gearing is a measure of balance sheet risk - the higher the proportion of debt in the funding mix, the higher profits will be in good times and the lower they will be in bad times.
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