Gearing ratio is a measure of how much borrowings does a company have as a percentage of its total equity. If the company has a high gearing ratio (typically more than 1), then there is an increased risk to the business in the event a recession occurs as the company may struggle to repay its interests and borrowings. If the gearing ratio is low (less than 0.5), then it may not be under high pressure in the event of recessions.
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