Capital Gearing
The degree to which a company acquires assets or to which it funds its ongoing operations with long- or short-term debt. Capital gearing will differ between companies and industries, and will often change over time.
Capital gearing is also known as "financial leverage". Investopedia Says:
In the event of a leveraged buyout, the amount of capital gearing a company will employ will dramatically increase as the company increases its debt in order to finance the acquisition. When analyzing a firm undergoing a leveraged buyout, it is important to consider the firm's ability to service the additional interest payments on an after-tax basis, as well as the likelihood of the firm paying off the new debt as it matures. Related Terms:
Debt/Equity Ratio
Degree Of Financial Leverage - DFL
Deleverage
Leverage
Leverage Ratio
Leveraged Buyout - LBO
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