Equity Multiplier
Equity Multiplier=Total AssetsStockholders Equity
Total Assets | ||
Stockholders Equity | ||
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UUID | cdb67520-0c06-11e4-b7aa-bc764e2038f2 |
The Equity Multiplier (EM) is a financial leverage ratio that evaluates a company's use of debt to purchase assets.
EXAMPLE
ABC company has assets valued at $6 million and stockholder equity of $2 million. The equity multiplier value would be 3.0 ($6 million / $2 million), meaning that one third of a company’s assets are financed by equity.
This equation, Equity Multiplier, is used in 1 page
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