management Back Forwards
Accounting: Ratio Analysis
 

(1) The Debt/Equity Ratio

This measure gives a good indication of the level of financial risk (gearing) due to fixed interest payments being required.

= All interest bearing or fixed payment capital
Ordinary shareholders' funds

 

(Creditors due after 1 year + Short-term bank loans/Overdrafts + Pref. Shares)
Ordinary Share Capital + Reserves

 

 
86.5+68.5*
=
155.0
=
0.58 or 58%
266.7
  
266.7
    

 

Note 17 Creditors  
Amounts falling due within one year:  
Bank loans and overdrafts 68.5*
Trade creditors 42.2
Bills of exchange payable 0.8
Other creditors 11.6
Proposed dividend 22.5
Corporate taxation 17.9
Other taxation and social security costs 7.0
Accruals 79.7
  250.2