CIMA Fundamentals of financial accounting BA3 Question # 96 Topic 10 Discussion

CIMA Fundamentals of financial accounting BA3 Question # 96 Topic 10 Discussion

BA3 Exam Topic 10 Question 96 Discussion:
Question #: 96
Topic #: 10

Refer to the exhibit.

BA3 Question 96

A business has the following capital and long-term liabilities:

It calculates its gearing ratio as the proportion of debt to total capital.

At the end of the current year, its gearing ratio, compared with that of the previous year, is:


A.

Higher, resulting in greater risk for shareholders


B.

Higher, resulting in greater security for shareholders


C.

Lower, resulting in greater security for shareholders


D.

The same as the previous year


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