What is 'Gearing'
The level of a company’s debt related to its equity capital, usually expressed in percentage form. Gearing is a measure of a company’s financial leverage and shows the extent to which its operations are funded by lenders versus shareholders. The term “gearing” also refers to the ratio between a company’s stock price and the price of its warrants. Gearing can be measured by a number of ratios, including the debttoequity ratio, equity ratio and debtservice ratio. The appropriate level of gearing for a company depends on its sector, as well as the degree of leverage employed by its peers.
BREAKING DOWN 'Gearing'
For example, a gearing ratio of 70% shows that a company’s debt levels are 70% of its equity. Is this too much debt? That depends on the industry in which the company operates. A gearing ratio of 70% may be very manageable for a utility, but it may be far too much for a technology company.
In general, a company with excessive leverage as demonstrated by its high gearing ratio may be more vulnerable to economic downturns. This is because it has to make interest payments and service its debt through cash flows that may be significantly lower due to the downturn.
The flipside of this argument is that leverage works well during good times, since all the excess cash flows accrue to shareholders once the debt service payments have been made.

Gearing Ratio
A general term describing a financial ratio that compares some ... 
Capital Gearing
The degree to which a company acquires assets or to which it ... 
Leverage Ratio
Any ratio used to calculate the financial leverage of a company ... 
Capitalization Ratios
Indicators that measure the proportion of debt in a company’s ... 
LongTerm Debt To Capitalization ...
A ratio showing the financial leverage of a firm, calculated ... 
Debt Ratio
A financial ratio that measures the extent of a company’s or ...

Fundamental Analysis
What is Gearing?
Gearing, also called leverage, is the degree to which a company’s operations are funded by lenders versus shareholders. 
Fundamental Analysis
What Is A Good Gearing Ratio?
Gearing ratios are useful for evaluating a company’s financial fitness through the figures found on its profit and loss statement. 
Fundamental Analysis
What is the Gearing Ratio?
Gearing ratios are financial ratios that measure a company’s leverage. 
Credit & Loans
Debt Ratios
Learn about the debt ratio, debtequity ratio, capitalization ratio, interest coverage ratio and the cash flow to debt ratio. 
Investing Basics
Understanding Leverage Ratios
Large amounts of debt can cause businesses to become less competitive and, in some cases, lead to default. To lower their risk, investors use a variety of leverage ratios  including the debt, ... 
Trading Strategies
Financial Ratios to Spot Companies Headed for Bankruptcy
Obtain information about specific financial ratios investors should monitor to get early warnings about companies potentially headed for bankruptcy. 
Forex
The Debt To Equity Ratio
The debt to equity ratio identifies companies that are highly leveraged and therefore a higher risk for investors. Find out how this ratio is calculated and how you can use it to evaluate a stock. 
Fundamental Analysis
4 Leverage Ratios Used In Evaluating Energy Firms
These four leverage ratios can help investors understand how oil and gas firms are managing their debt. 
Credit & Loans
Debt Ratios: Capitalization Ratio
By Richard Loth (Contact  Biography)The capitalization ratio measures the debt component of a company's capital structure, or capitalization (i.e., the sum of longterm debt liabilities and ... 
Active Trading Fundamentals
Analyzing AT&T's Debt Ratios in 2016 (T)
Learn about AT&T Inc. and its key debt ratios, such as the debttoequity ratio, interest coverage ratio and cash flowtodebt ratio.

What is the difference between the gearing ratio and the debttoequity ratio?
Dive deeper into gearing ratios: what are they, how are they used and why the debt to equity ratio is one of the most popular ... Read Answer >> 
What is the difference between a capital gearing ratio and a net gearing ratio?
Understand the definition of gearing in the finance industry, the difference between net gearing and capital gearing ratios ... Read Answer >> 
What is considered to be a bad gearing ratio?
Understand the basics of gearing, including the net gearing ratio, what constitutes a bad gearing ratio and how this figure ... Read Answer >> 
What is the most widely used gearing ratio?
Understand the most commonly used gearing, or leverage, ratio used to evaluate a company's financial condition, the debt ... Read Answer >> 
If a company has a high debt to capital ratio, what else should I look at before ...
Learn about some of the financial leverage and profitability ratios that investors can analyze to supplement examining the ... Read Answer >> 
What are financial risk ratios and how are they used to measure risk?
Explore some of the primary financial risk ratios that investors and analysts commonly use to evaluate a company's overall ... Read Answer >>