Question: Using the formula, gearing ratio = long-term liabilities/ (shareholders' funds + long-term liabilities) 100%, calculate the gearing ratio from the following information. Long-term liabilities $20m

Using the formula, gearing ratio = long-term liabilities/ (shareholders' funds + long-term liabilities) 100%, calculate the gearing ratio from the following information.

Long-term liabilities $20m

Share capital $14m Retained earnings $6m General reserve $2m

(NOTE): upon completing this test i have found the answer is 48%. I am just unsure how to come to that answer and would like to see the working out.

Thanks!

A. 91%.

B. 48%.

C. 59%.

D. 56%.

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