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Debt/equity ratio
by Alexandra_5478 Leaving Cert Business — 27/09/16 3

Hi guys.For the gearingratio (debt capital : equity capital) i have that the long term loan is 200.000€ so that means that is debt.Then I have to calculate the equity capital?How do I do it?The info i have: retained earnings-150.000€ issued share capital 450.000€ and authorised share cap. 900.000€ which ones do I add together to find the equity capital???Do I add the issued share capital and retained earnings?What about authorised share capital?Thank u.


3 Comments
Browneyedgirl99 — 27/09/16
debt capital is long term loan plus preference shares. Equity capital is your retained earning plus your issues share capital. :) make sure when dividing your put your equity capital under your debt capital and put it as something :1 like a ratio or you wont get your points :) Authorized share capital is just there to trick ya!!
Alexandra_5478 — 27/09/16
Thank u so much it worked! What about the Capital employed? Im asking to calculate the Return on Investment(roi) and I know the formula also the net profit is given! I need only to find capital employed now! Is it ordinary share cap+ long term loan+ retained earnings? To make the capital employed?I have more figures like Sales, Current Liabilities, Closing stock and current assets. Thankkkk you!!!
Browneyedgirl99 — 27/09/16
capital employed is LTL plus Ordinary Share Capital plus Retained Earnings :) You're dead on! you go girl!! :)
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