Pages: 1
RSS
Equity Multiplier
 
what is equity multiplier and why it is not use as common other ratios?
 
In finance, equity multiplier is defined as a measure of financial leverage.
As explained by Investopedia, the equity multiplier shows a company’s total assets per dollar of stockholders’ equity. The higher the equity multiplier, the higher is the financial leverage, which indicates that the company relies more on debt to finance its assets.

Calculating Equity Multiplier
The equity multiplier is calculated by dividing total assets by the common stockholder’s equity.

Formula for Equity Multiplier
The common formula used for calculating equity multiplier is:
Equity Multiplier = Total Assets / Stockholder's Equity
Pages: 1

Login to ReadyRatios

 

Have you forgotten your password?

Are you a new user?

Login As
You can log in if you are registered at one of these services: