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Capital Gearing Ratio numerator includes:
AEquity Share Capital + Reserves
BPreference Capital + Debentures + Other Borrowed funds
CTotal Liabilities
DLong-term debt only
Answer & Solution
Correct answer: B. Preference Capital + Debentures + Other Borrowed funds
1. Capital Gearing = Fixed-cost capital / Equity holders' fund.
2. Numerator = Preference Share Capital + Debentures + Other Borrowed funds.
3. Denominator = Equity Share Capital + Reserves & Surplus − Losses.
_Source: ICAI BoS CA Inter Paper 6A, Ch 3 "Financial Analysis and Planning — Ratio Analysis", §3.2.1(e)_