Financial Ratios

This blog post discusses three financial ratios: debt-equity ratio, proprietary ratio, and capital gearing ratio. The formulas for these ratios are provided, along with examples of how to calculate them. The post also includes a question and answer section, where the reader can learn more about these ratios.

Questions

1. What is the debt-equity ratio?
2. What is the proprietary ratio?
3. What is the capital gearing ratio?

Answers

1. The debt-equity ratio is a measure of the amount of debt a company has relative to its equity. It is calculated by dividing the total amount of debt by the total amount of equity.
2. The proprietary ratio is a measure of the proportion of a company’s assets that are financed by equity. It is calculated by dividing the total amount of equity by the total assets.
3. The capital gearing ratio is a measure of the extent to which a company’s capital is financed by fixed-interest debt. It is calculated by dividing the total amount of debt that carries a fixed interest rate by the total amount of equity plus debt.