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Financial performance measures in the private sector
2.4 Measuring risk
Also needs to considers since measures the ability of the organisation
to meet its liabilities.
Measures include:
Financial gearing = (long-term debt÷ shareholders’ funds) × 100
or = (long-term debt÷ (long-term debt + shareholders’ funds))
× 100
Operating gearing = fixed costs ÷ variable costs
Interest cover = PBIT ÷ interest charges
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