Equity multiplier

Equity multiplier


Equity multiplier is an important financial leverage ratio. This ratio shows how a company uses its debt to finance company’s assets. Equity multiplier is also known as the financial leverage ratio, or leverage ratio. Data to calculate this ratio is collected from balance sheet.

Norms and limitations

There are no general norms for this ratio.

A higher value of equity multiplier indicates a stronger financial leverage. It means that the company’s activity might be considered more risky.

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