Hi PC, In your volume 5 video that is the gear ratio for RHT and CRT. I unable to calculate the ratio. Can u write down the formula to calculate the ratio. Thanks

Hi Kok Yee,

I believe you are referring to the REITs.

The gearing ratio for REITs are different form that of other stocks.

They have to meet certain guideline stipulated the respective Securities Commissions.

The Gearing Ratio is calculated as the Total Borrowings (Current Borrowings + Non-Current Borrowings) and is divided by the Total Assets; ie:

(Current Borrowings + Non-Current Borrowings)/Total Assets

hope this helps.

Hi PC,

you mean total liability / total asset right?

However from the video 5 the CRT

total liability is 56814.8

Total asset is 100401

from the formula 56814.8/100410 is 0.56

why the answer you provide in the KPI is 0.47? How u get this answer?

Hi Kok Yee,

By CRT you mean Croesus Retail Trust which is a REIT?

The measurement of the gearing ratio between REITs and other stocks are different.

In REITs it is the Total Borrowings/Total Asset not Total Liabilities/Total Assets

What is the difference?

Total Borrowings are funds which the REIT borrows from financial institutions whether it is Current or Non Current.

Total Borrowings is not Total Liabilities

The borrowings exist as AN ITEM under the Current Liabilities and Non Current Liabilities heading. Sometimes there may not be any borrowings under the Current Liabilities heading.

In other stocks (non REITs), the gearing ratio is calculated as Total Liabilities Total Equity.

Hope this clarifies.

Total Liabilities/Total Equity