9.38 Better Belter Limited had the following capital structure at 31 October 20X2: Ordinary share capital

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9.38 Better Belter Limited had the following capital structure at 31 October 20X2:

£

Ordinary share capital (£1 shares) 80,000 Retained earnings 696,400 Long-term borrowings (8% interest rate) 300,000 Profit before interest and tax for the year ended 31 October 20X2 was £35,000, and finance costs were

£24,000.

Calculate the following ratios:

i) gearing (on the basis of debt/equity)

ii) interest cover.

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