Using the data from Extract A, calculate the difference in the gearing ratio for easyJet plc between 2019 and 2020 - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2
Question 1
Using the data from Extract A, calculate the difference in the gearing ratio for easyJet plc between 2019 and 2020. You should state the difference to two decimal pl... show full transcript
Worked Solution & Example Answer:Using the data from Extract A, calculate the difference in the gearing ratio for easyJet plc between 2019 and 2020 - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2
Step 1
Calculate Total Capital Employed for 2020
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Answer
To find the total capital employed for easyJet plc in 2020, we add the non-current liabilities to total equity:
Total Capital Employed = Non-current Liabilities + Total Equity
Total Capital Employed (2020) = £2748m + £1899m = £4647m
Step 2
Calculate Gearing Ratio for 2020
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Answer
The gearing ratio is calculated using the formula:
Gearing Ratio = (Non-current Liabilities / Capital Employed) x 100
For 2020:
Gearing Ratio (2020) = (2748 / 4647) x 100 = 59.13%
Step 3
Calculate Gearing Ratio for 2019
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Answer
Given that easyJet plc's gearing for 2019 was 45.67%, we can proceed to find the difference.
Step 4
Calculate the Difference in Gearing Ratios
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Answer
Now, we find the difference in gearing ratios between 2019 and 2020:
Difference = Gearing Ratio (2020) - Gearing Ratio (2019)
Difference = 59.13% - 45.67% = 13.46%
Thus, the difference in the gearing ratio for easyJet plc between 2019 and 2020 is 13.46%.
