2 min read
Debt vs equityThe ratio
High = riskLess cushion
Definition
The gearing ratio = debt ÷ equity (or debt ÷ debt + equity). A highly geared business is funded largely by debt, which magnifies both returns and losses, and must be serviced whatever happens.
In plain terms
It is how much of the business is built on borrowed money versus the owners' own stake. More debt means more risk if trading dips.
Why it matters for your company
Lenders watch gearing as a resilience signal. Keep it moderate, and pair it with healthy interest cover. Use the gearing ratio calculator.
Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.