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Equity Multiplier
What will be the Equity Multiplier given that Total Equity = $1274 and Total Assets = $1770
very good thanks,
The equity multiplier formula is used in the return on equity DuPont formula for the financial leverage portion of DuPont analysis. Broadly speaking, financial leverage is used in financial analysis to evaluate a company's use of debt.
To understand how the equity multiplier formula is related to debt, it should be noted that in finance, a company's assets equal debt plus equity. Debt is not specifically referenced in the equity multiplier formula, but it is an underlying factor in that total assets in the numerator of the formula for the equity multiplier includes debt. This can be shown by restating total assets in the equity multiplier formula as debt plus equity.
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