In a High Gearing?

A high gearing ratio means the company has a larger proportion of debt versus equity. Conversely, a low gearing ratio means the company has a small proportion of debt versus equity. Capital gearing is a British term that refers to the amount of debt a company has relative to its equity.

What does a higher gearing mean?

A higher gearing ratio indicates that a company has a higher degree of financial leverage and is more susceptible to downturns in the economy and the business cycle. This is because companies that have higher leverage have higher amounts of debt compared to shareholders' equity.

What is high capital gearing?

A company is said to have a high capital gearing if the company has a large debt as compared to its equity. For example, if a company is said to have a capital gearing of 3.0, it means that the company has debt thrice as much as its equity.