The correct answers are: Ten year finance lease; Introduction of new capital; Five year hire purchase agreement.

Capital gearing ratio = (Long-term debt)/(Long-term debt + shareholders funds)

Using cash from the business bank account will not affect any element of this ratio; neither will a short-term bank loan. Although different in legal form, the commercial substance of finance leases and hire purchase agreements is that the business has the right to use the asset. Thus both will treat the asset as capital expenditure, and will recognise the liability towards the lease or HP creditor (payable) as a long term creditor (payable). This will affect the debt figure used in the gearing ratio.

If an asset is financed by new capital (for example, from the owner of an unincorporated business, or from shareholders of a company) this will affect the shareholders' funds and thus the gearing ratio.