Gearing Ratios

I did some research and realised that the generic term "gearing" that people use have different meanings.

For Reits: Gearing = Total Debt/Total Asset.
Using LMIR as example for FY2010, gearing = 125000 / 1212508 = 10.3% (ST debt of LMIR = 0)
(this is what you see in the presentation in LMIR.)
(For reits, this is usually the gearing which they talk about)

However, some people also use gearing as Total debt/Total Equity where Total debt = LT debt + ST debt
Using LMIR as example for FY2010, gearing = 125000 / 901909 = 13.7%

For Net gearing, which is more comprehensive in my opinion as it account the cash portion.
Net gearing = Net debt / Total equity where Net debt = LT debt + ST debt - cash & cash equivalents. This ratio include the liquid portion of the company, cash & cash equivalents.
Using LMIR as example for FY2010, net gearing = (125000 + 0 -109979) / 901909 =1.67%

Of course, there is also the famous debt to equity ratio. Debt to equity = LT debt/equity.

In summary, there are many gearing ratios available. Different gearing ratios should be use for different purposes. Always think of purpose first before using.

Next time, when other people talk about gearing, please remember to ask them which gearing they are talking about.