MEASURE:

Gearing Ratio:

Marks and Spencer: Gearing ratio of Marks and Spencer was stable for three years from 1999 to 2001. Fall in 2001 has forced it to revert to old policy whereby it proposed group structuring and capital restructuring strategy which required funds.

"To funds these cost, it entered into structured Sale and lease back agreement, sold its 78 freehold and leasehold stores across UK for cash consideration of £348 million to Top land Group". (www.marksandspencer.com, 03/03/2004)

It raised altogether of £1513m from its Asset portfolio and two Euro bonds which altered its financial structure eventually raising its Gearing ratio of 70 % in 2002 however it decline slightly by 10 % in 2003, yet Gearing ratio is still high to be ignored.

Although company is using cheaper loan compare to equity to fund costs, it must consider that high gearing ratio represents high risk, requiring higher return for investors as they stand most to loose if company fails......

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Title: Gearing Ratio Of Marks And Spencer
Approximate Word Count: 804
Approximate Pages: 4 (250 words per double-spaced page)

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