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.
Investopedia Commentary
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.
Related Links
Debt Reckoning
When Companies Borrow Money
Ratio Analysis Tutorial
See also: Asset, Current Ratio, Debt Ratio, Debt/Equity Ratio, Du Pont Identity, Earnings Multiplier, Equity, Leverage, Stockholder's Equity