| Popis: |
DESPITE-PERHAPS ON ACCOUNT OF-the widespread use of the concept of gearing or leverage, there appears to be little agreement regarding its specific content. Thus some define leverage as the ratio of the value of "senior capital" (= debentures + preferred shares) to the value of the equity;' others use the structure of the income statement;2 and yet others advise the comparison of rates of return on different types of structured capitalizations.' To these basic measures further diversity has been introduced by using balance sheet or market valuations, and by calculating the income components gross or net of tax, gross or net of distributions. In this paper we will not propose yet another measure for consideration, nor do we intend to adjudicate amongst those already suggested. Our aim is more modest: to present the major formulations that have been used or recommended and to examine the extent to which they are internally consistent. We will show that a number of these measures can be translated unambiguously into one or more of the others; and we will examine empirically the remaining measures 'which may yield inconsistencies to see how, in fact, they have behaved. |
