Gearing
A measure of financial leverage showing how much a company is funded by debt. The level of a company’s net debt is most commonly compared with its equity capital and expressed as a percentage. So a company with gearing of 20% has debt levels equating to 20% of its equity capital. The higher a company’s gearing the more risky it is considered to be. Gearing is also known as financial leverage.
This definition is for general information purposes only