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Home > QFINANCE Dictionary > Definition of high gearing

Definition of

high gearing

Finance

when firm borrows a lot of money a situation in which a company has a high level of borrowing compared to its stock price

high gearing - Related Articles
  • Measuring Gearing

    Checklists

    In derivatives markets, gearing compares the amount of cash spent purchasing an option or a futures contract with the actual value of the underlying position. The more highly leveraged the trading position, the bigger the risk that a minor change in market prices will totally wipe out the investment

  • Interest Rate Risk

    Key Concepts

    Equities typically carry less direct exposure to interest rate risk, though companies with high levels of borrowing—also termed companies with high gearing—can be heavily exposed to interest rate movements which set their interest repayments costs. Institutions can also carry considerable interest

  • Investors and the Capital Structure

    Checklists

    To better understand the nature of a company’s capital structure, it is worth considering the comparative levels of equity and debt. Companies with relatively high levels of debt are said to have higher “gearing.” However, a company’s gearing outlook is not always as simple as it may appear at first

  • How Taxation Impacts on Liquidity Management

    Best Practice

    A company is said to be “thinly capitalized” where it is particularly highly geared. The tax authorities are concerned to ensure that companies do not receive debt funding from affiliates at levels that mean their profits are largely sheltered by interest expense. Many jurisdictions have now passed
    By Martin O’Donovan

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Definitions of ’high gearing’ and meaning of ’high gearing’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’high gearing’ and other financial terms with our online QFINANCE Financial Dictionary.

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