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Thursday, March 25, 2021

Accounts and Finance Gearing Ratio worksheet

 

Accounts and Finance – Gearing Ratio

Carlos Builders Limited ( CBL)

 

Gearing ratio worksheet

Carlos Builders are specialized in commercial property development and maintenance. CBL has its registered office in Mumbai, India, and has branches in other metropolitan cities of India. The following information has been extracted from the financial statements of CBL for 2019 and 2020.

 

 

2019 ( $)

2020 ( $)

Share capital

200,000

220,000

Accumulated retained profit

20,000

28,000

Fixed assets

300,000

340,000

Current assets

58,000

60,000

Current liabilities

38,500

38,000

Long term liabilities

99,500

114,000

 Questions:

 

a)     Define the term ‘gearing ratio’.

[2 marks]

b)    Calculate the gearing ratio for CBL for 2019 and 2020.

[4 marks]

c)     Comment on the gearing ratio of CBL.

[ 2 marks]

d)    Identify and explain  two stakeholders who might be interested in the gearing ratio of CBL.

 

[ 4 marks]

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