Gearing Ratio Calculator

Gearing measures how much of a business is funded by borrowing rather than by its owners. Enter total debt and shareholders equity and this returns the debt to equity gearing ratio, capital gearing as a share of capital employed, and the debt ratio when you add total assets. Separate tabs take cash off the borrowing for net gearing, the figure most companies quote about themselves, and divide operating profit by the interest bill for interest cover. Debt here means interest-bearing borrowing only, and the bands attached to each answer are a rule of thumb that is worth nothing without an industry comparison.

Calculator Type

The debt to equity gearing ratio, capital gearing, and the debt ratio when you add total assets.

Interest-bearing borrowing, short and long term. Use the same unit for every figure on this form.
Total equity from the balance sheet: share capital plus reserves and retained earnings. It may be negative.
Adds the debt ratio, which is debt against everything the business owns.
Widget

Net debt takes cash off the borrowing first, which is how most companies report their own gearing.

Interest-bearing borrowing, short and long term. Use the same unit for every figure on this form.
Cash, bank balances and short term deposits that could repay borrowing tomorrow.
Total equity from the balance sheet: share capital plus reserves and retained earnings. It may be negative.
Widget

How many times over the operating profit pays the interest bill. Gearing says how much is borrowed; this says whether it can be carried.

Earnings before interest and tax. It may be negative.
The finance cost for the same period as the operating profit.
Widget
Related Tools
Debt-to-Income Ratio Calculator Business Valuation Calculator WACC Calculator