DEFINITION of 'Degearing'

The action of a company altering its capital structure by replacing long-term debt with equity, thereby easing the burden of interest payments and also increasing management's flexibility.


A company is highly geared or leveraged when a large portion of its capital structure is made up of long-term debt. Degearing is a movement away from this capital structure in the effort to decrease financial risk.

  1. Equity

    Equity is the value of an asset less the value of all liabilities ...
  2. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  3. Gearing

    The level of a company’s debt related to its equity capital, ...
  4. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  5. Deleverage

    A company's attempt to decrease its financial leverage. The best ...
  6. Leverage

    1. The use of various financial instruments or borrowed capital, ...
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