DEFINITION OF '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 debt-to-equity ratio, equity ratio and debt-service ratio. The appropriate level of gearing for a company depends on its sector, as well as the degree of leverage employed by its peers.
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