What Is Gearing? A Simple Definition
Gearing is a popular word in the financial world. It is a synonym of ‘financial leverage’ and both of these words can be used interchangeably. This is a ratio between the amount of own and the amount of borrowed capital in a business, personal budget, or any other financial unit. To learn more about leverage in finance, you can read our example on this matter here. Gearing Ratio As we said earlier, the gearing ratio is the percentage of own funds from borrowed funds. An example of this is the debt-to-equity ratio from corporate finance. Let’s say that a company...