Gearing and Project management: Difference between pages

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''Business skills - planning and projects.''


''Financial gearing'' measures the relative amount of debt in a firm's capital structure.
Project management is the discipline and skill of designing and implementing significant projects.


Gearing ratios can be calculated in several different ways, so consistency of approach is important.
Especially when using a recognised project management structure such as PRINCE2, agile or waterfall methodologies.
 
Two essential bases to define are:
 
i. The use of book or market values.
 
ii. The use of Debt divided by Equity (D/E) or of Debt divided by Debt plus Equity = D/[D+E].
 
 
Historically, use of the D/E version of the measure was more common in the UK.
 
With respect to the Debt figure, practice varies in including or excluding certain items such as cash, short term borrowings, leases, pensions and other provisions.
 
Practitioners may also adjust the Equity figure, for example to exclude intangible assets.
 
 
2.
 
''Operational gearing'' relates to the operating costs of a business, and measures the relative proportions of fixed and variable operating costs.
 
 
3.
 
'Gearing up' refers to increasing the levels of financial or operation gearing - or both - within an organisation.
 
The intention of gearing up is to improve expected net results. 
 
The consequence of gearing up is normally to increase risk.
 
Many financial disasters have been a consequence of gearing up (or leveraging) in this way in earlier periods.




== See also ==
== See also ==
* [[Debt equity ratio]]
* [[Adverse selection]]
* [[Debt to equity ratio]]
* [[Agile]]
* [[Intangible assets]]
* [[Business skills]]
* [[Leverage]]
* [[Gantt chart]]
* [[Leveraged]]
* [[Infrastructure and Projects Authority]]
* [[Leveraged takeover]]
* [[Planning and projects]]
* [[Levered]]
* [[PRINCE2]]
* [[Off-balance sheet finance]]
* [[Project analysis]]
* [[Ungeared]]
* [[Safety margin]]
* [[Ungeared cash flow]]
* [[Waterfall methodology]]
 
 
==Other links==
[http://www.treasurers.org/node/8012 Masterclass: Measuring financial risk, The Treasurer, July 2012]


[[Category:Capital_Structure]]
[[Category:Commercial_drive_and_organisation]]
[[Category:Influencing]]
[[Category:Self_management_and_accountability]]
[[Category:Working_effectively_with_others]]
[[Category:Knowledge_and_information_management]]
[[Category:Planning_and_projects]]

Revision as of 10:17, 27 May 2021

Business skills - planning and projects.

Project management is the discipline and skill of designing and implementing significant projects.

Especially when using a recognised project management structure such as PRINCE2, agile or waterfall methodologies.


See also

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