Equity Multiplier Calculator

Equity Multiplier Definition

The equity multiplier is a financial ratio that measures the extent to which a company relies on debt financing to fund its assets. It is calculated by dividing total assets by total equity. The equity multiplier is important because it helps assess a company’s leverage or risk level. A higher equity multiplier indicates that a larger portion of the company’s assets is financed through debt, which can increase financial risk. Conversely, a lower equity multiplier suggests a lower reliance on debt and a stronger financial position.