For the year ended 31 December 20x5 a company had a gearing ratio (debt equity) of 40%. The equity finance in the statement of financial position is US$800,000. During the year ended 31 December 20x6, the company generated profit after tax of US$100,000 and paid a dividend to its shareholders of US$20,000. If the company does not issue or redeem any new capital, what is the expected gearing ratio at 31 December 20x6? Solution A. 35.6% B. 36.4% C. 39.0%