Degearing

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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.

INVESTOPEDIA EXPLAINS 'Degearing'

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.

RELATED TERMS
  1. Debt Ratio

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

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  3. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  4. Capital Structure

    A mix of a company's long-term debt, specific short-term debt, ...
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  6. Equity

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