Equity Multiplier


Equity Multiplier
A measure of financial leverage. Calculated as:

Total Assets / Total Stockholders' Equity

Like all debt management ratios, the equity multiplier is a way of examining how a company uses debt to finance its assets. Also known as the financial leverage ratio or leverage ratio.

In other words, this ratio shows a company's total assets per dollar of stockholders' equity. A higher equity multiplier indicates higher financial leverage, which means the company is relying more on debt to finance its assets.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Equity multiplier — Total assets divided by total common stockholders equity; the amount of total assets per dollar of stockholders equity. The New York Times Financial Glossary …   Financial and business terms

  • equity multiplier — Total assets divided by total common stockholders equity; the total assets per dollar of stockholders equity. Bloomberg Financial Dictionary …   Financial and business terms

  • return on equity — ( ROE) A measure of the return realized by the owners of an enterprise. Calculated by dividing an enterprise s annualized net income by its average capital for the period. Alternatively, it can be calculated by multiplying the enterprise s ROA by …   Financial and business terms

  • Private equity — Capital investissement Le capital investissement est une activité financière consistant pour un investisseur à entrer au capital de sociétés qui ont besoin de capitaux propres. Le terme de capital investissement concerne généralement l… …   Wikipédia en Français

  • DuPont Identity — An expression that breaks return on equity (ROE) down into three parts: profit margin, total asset turnover and financial leverage. It is also known as DuPont Analysis . DuPont identity tells us that ROE is affected by three things: Operating… …   Investment dictionary

  • DuPont analysis — (also known as the DuPont identity, DuPont equation, DuPont Model or the DuPont method) is an expression which breaks ROE (Return On Equity) into three parts. The name comes from the DuPont Corporation that started using this formula in the 1920s …   Wikipedia

  • DuPont Analysis — A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are measured at their gross book value rather than at net book value in order to produce a higher return on equity (ROE). It is… …   Investment dictionary

  • ROE — return on equity (ROE) A measure of the return realized by the owners of an enterprise. Calculated by dividing an enterprise s annualized net income by its average capital for the period. Alternatively, it can be calculated by multiplying the… …   Financial and business terms

  • EM —   An acronym for equity multiplier …   International financial encyclopaedia

  • Fractional reserve banking — Banking A series on Financial services …   Wikipedia


We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.