The following information is from the annual report of Thunderstruck Ltd:
Statement of financial position of Thunderstruck Ltd as at 31 December 201X

Income statement extract of Thunderstruck Ltd for the year ended 31 December 201X
$$\begin{array} { l r }
\text { Revenue } & 250 \
\text { Gross profit } & 75 \
\text { Operating profit } & 45 \
\text { Profit for the period } & 25
\end{array}$$
From the information provide above,calculate the capital gearing ratio
A) 62.9%
B) 67.4%
C) 59.5%
D) 56.3%

Question

The following information is from the annual report of Thunderstruck Ltd:
Statement of financial position of Thunderstruck Ltd as at 31 December 201X

Income statement extract of Thunderstruck Ltd for the year ended 31 December 201X
$$\begin{array} { l r } 
\text { Revenue } & 250 \
\text { Gross profit } & 75 \
\text { Operating profit } & 45 \
\text { Profit for the period } & 25
\end{array}$$
From the information provide above,calculate the capital gearing ratio
A) 62.9% 
B) 67.4% 
C) 59.5% 
D) 56.3%

Quizplus · Accepted Answer

Capital gearing ratio is calculated by dividing long-term debt by shareholder's equity.

Long term debt = Non-current liabilities = $488,000

Shareholder's equity = Total equity = $814,000

Capital gearing ratio = (488,000/814,000) x 100 = 59.95% ≈ 59.5%

Therefore, the answer is C - 59.5%

The Following Information Is from the Annual Report of Thunderstruck