Economics · Financial Management
Directors often take steps to manage a company's gearing ratio. Consider the following corporate measures: 1. Renegotiating a loan to secure a lower interest rate. 2. Applying the optional recognition exemption to a short-term or low-value lease contract under IFRS 16 Leases. 3. Repaying a loan just before the year-end and taking it out again at the beginning of the next fiscal year. 4. Selling an asset under a sale and leaseback agreement that qualifies as a sale. Which combination correctly matches the effect of these measures on the company's gearing ratio?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 11 Reduces, 2 Reduces, 3 has No Effect, 4 No Effect
- 21 Reduces, 2 has No Effect, 3 has No Effect, 4 Reduces
- 31 has No Effect, 2 Reduces, 3 Reduces, 4 Reduces✓
- 41 has No Effect, 2 Reduces, 3 Reduces, 4 Increases
Correct answer
1 has No Effect, 2 Reduces, 3 Reduces, 4 Reduces
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