Capital Gearing Ratio in Simple language

In layman's language,

Capital gearing ratio=Capital bearing risk

                                        Capital not bearing risk

Capital bearing ratio includes debentures(risk is to pay interest) and preference capital (risk to pay dividend at fixed rate).

Capital not bearing risk includes equity share capital.

Therefore you can also say,

Capital gearing ratio= Debentures+Preference share capital

                                         Equity shareholders' funds

Regards

Poonam Thanvi

capital gearing ratio in financial terms is

borrowed  funds +pref  /shareholders funds-prefrence

 in simple laymans language it is capital en titled to fixed int & dividend by capital not entitled to fixed interest & dividend

Dear Neelima,

                          Hope the above two have made it clear..Tats the simplest it can get it seems..