UK Accounting Glossary
The Equity Multiplier ratio is calculated as total assets divided by the common stockholder’s equity.
A company’s assets equal the sum of debt and equity. The ratio consists of the equity portion of the assets of a company.
The Equity Multiplier formula calculates a company’s total assets per dollar of stockholders’ equity. It shows the extent that the financial leverage is used by a company to finance its assets.
There are three methods to analyze a company using the Equity Multiplier (financial leverage) ratio:
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This glossary post was last updated: 22nd March 2020.