GEARING Definition

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GEARING is the proportion of the capital employed of a company that is financed by lenders rather than shareholders.

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REPLACEMENT VALUE is the cost to replace an item on the present market. Replacement value is a valuation similar to an adjusted book value analysis. Replacement value is different than liquidation value in that is uses the value of the replacement value of assets, which is usually higher than book value. Liabilities are deducted from the replacement value of the assets to determine the replacement value of the business.

CRITICAL FEW see 80 - 20 RULE.

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