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HOSTING A TOTAL OF 318 FORMULAS WITH CALCULATORS

Equity Multiplier

The formula for equity multiplier is total assets divided by stockholder's equity. Equity multiplier is a financial leverage ratio that evaluates a company's use of debt to purchase assets.

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.

a e

Here,a=Total Assets,e=Stockholder's Equity.

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