Highly Geared (1 Viewer)

[hYperTrOphY]

What percentage of debt to equity is needed for a business to be considered highly geared? In my notes I have 66% in one part, and 100% in another.

 

[manifestation]

All i know is that a common rule is that a businesses debt to equity should be: 60% from debt and 40% from equity.

 

[Logain]

100%+ would constitute a highly geared business, says my tutor.

 

[Grandor]

How the hell can it be over 100% ??

If you are 100% using debt finance, you are only using debt finance.
You can't do 110% of something?

Im confused.

 

[The_Apprentice]

I recall it being 60% or over as highly geared. I'm pretty sure thats it. Check the textbook, if its in it.

a businesses debt to equity should be: 60% from debt and 40% from equity.

I agree with Manifestation, but this is just a general guideline. It may also depend on the b's lifecycle stage and the industry it operates in.

haha this thread is really old.