Which of these are alternative measures of gearing?
A)Total liabilities/total assets.
B)Total liabilities/total owners' equity.
C)Long-term liabilities/ total owners' equity.
D)All are alternative measures of gearing.

Question

Quizplus · Accepted Answer

All the given measures are alternative measures of gearing. Total liabilities/total assets and long-term liabilities/total owners' equity both give an indication of how much a company relies on borrowed funds to finance its assets, while total liabilities/total owners' equity indicates the proportion of borrowed funds relative to the amount of equity invested by the owners.

Which of These Are Alternative Measures of Gearing