Carlos Builders are specialized in commercial property development and maintenance. CBL has its registered office in Mumbai, India, and has branches in other metropolitan cities of India. The following information has been extracted from the financial statements of CBL for 2019 and 2020.
| 2019$ | 2020$ | |
| Share capital | 200 000 | 220 000 |
| Accumulated retained profit | 20 000 | 28 000 |
| Fixed assets | 300 000 | 340 000 |
| Current assets | 58 000 | 60 000 |
| Current liabilities | 38 500 | 38 000 |
| Long term liabilities | 99 500 | 114 000 |
Questions:
- Define the term ‘gearing ratio’ [ 2 marks]
- Calculate the gearing ratio for CBL for 2019 and 2020 [ 4 marks]
- Comment on the gearing ratio calculated above [ 2 marks]
- Identify and explain two stakeholders who might be interested in the gearing ratio of CBL [ 4 marks]
