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Capital gearing ratio is .
Question

Capital gearing ratio is .

A.

Liquidity ratio

B.

Long Term Solvency ratio

C.

Turnover ratio

D.

Market Test ratio

Correct option is B

The Capital Gearing Ratio is a Long-Term Solvency Ratio that measures the proportion of a company's capital financed through fixed-interest or fixed-dividend sources, such as debt and preference shares, compared to equity. A higher ratio indicates higher financial leverage and dependency on borrowed funds, which can impact financial stability.​

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