Financial ratios for Business Studies: Gearing (debt to equity ratio)

Our examination of financial ratios in Business Studies continues!

Now, we're looking at GEARING. This is all about the long-term solvency of a business. The specific ratio we're looking at is the debt to equity ratio.

In this ratio, we'll compare the levels of debt and equity and consequences of having different levels of each. This is all about HOW a business chooses to finance its operations and the consequences of its choices.

What is 'gearing' and what level of gearing is 'good' (0:00)
The gearing ratio (including debt and equity) (4:10)
2012 past HSC question 22 (5:45)
2015 past HSC question 24 (7:00)

This video is focused on the NSW Business Studies HSC syllabus.

This is the HSC Business Studies syllabus:

I've sourced this information from a number of different places. I think the most important sources are:

1. Business Studies in Action (Chapman et al, any edition)

2. This Decoding HSC Business Studies book is outstanding. Fantastic info on answering specific HSC questions, including on Finance.

[Stephen]

Thank you very much, this was very helpful! For the HSC Business exam, will we have to memorise the ratios? Or will they always be given to us like in the 2015 example?

[samfitzz]

Could you wish my friend Dylan Mendoza a happy birthday in your next video? Thanks! :D