Capital Gearing Formula

Capital Gearing Formula

Capital Gearing is calculated by dividing debt financing by debt and equity.

Capital Gearing =               Debt Financing

                                           Debt + Equity

Capital Gearing Formula Example

ABC Company has issued notes of worth $ 100 million; ABC Company has issued 20 million @ 10. Calculate the Capital Gearing

Solution

Capital Gearing =               Debt Financing     x 100

                                           Debt + Equity

= (100/300) x 100

= 33.33%