Industrial and commercial companies' gearing

Quarterly Bulletin 1991 Q2
Published on 01 June 1991

The growing indebtedness of UK industrial and commercial companies has been a striking feature of the past three years. The sector's move into financial deficit, and the associated growth in debt as a proportion of its balance sheet, began at a time when trading conditions in both domestic and overseas markets were good. The move would therefore seem to have been voluntary. This article looks at the evidence of rising indebtedness at both an aggregate and an individual company level, and examines some of the explanations for this development offered by academic commentators and by company managers.

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