Can one include payables in the calculation of gearing and would it still be called gearing?
Andrew Answered question March 15, 2021
Yes, payables (which are short-term borrowings) should be included in the gearing ratio.
The gearing ratio is a measure of the amount of financial leverage an entity is carrying. Which is a fancy way of looking at how much of its net worth is funded from debt.
The general gearing formula used is:
(long-term debt + short-term debt) / capital
Andrew Answered question March 15, 2021
