gearing

Definitions

Accounting

  • noun the act of borrowing money at fixed interest which is then used to produce more money than the interest paid

Cars & Driving

  • noun the combination or system of gears designed to transmit power

Economics

  • noun the ratio of capital borrowed by a company at a fixed rate of interest to the company’s total capital. High gearing (when a company is said to be highly geared ) indicates that the level of borrowings is high when compared to its ordinary share capital. A lowly-geared company has borrowings which are relatively low. High gearing has the effect of increasing a company’s profitability when the company’s trading is expanding. If the trading pattern slows down, then the high interest charges associated with gearing will increase the rate of slowdown.

Law

  • noun the ratio of a company’s debt to its equity
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