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Equity Multiplier Formula

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The equity multiplier is a financial leverage ratio that measures the amount of a firm's assets that are financed by its shareholders by comparing total assets with total shareholder's equity. Check FAQs

EM = \frac{TA}{TSE}

EM - Equity Multiplier?TA - Total Assets?TSE - Total Shareholders' Equity?

Equity Multiplier Example

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Here is how the Equity Multiplier equation looks like with Values.

Here is how the Equity Multiplier equation looks like with Units.

Here is how the Equity Multiplier equation looks like.

833.3333 = \frac{100000}{120}

833.3333 = \frac{100000}{120}

833.3333 = \frac{100000}{120}

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Equity Multiplier Solution

Follow our step by step solution on how to calculate Equity Multiplier?

FIRST Step Consider the formula

EM = \frac{TA}{TSE}

Next Step Substitute values of Variables

∴

EM = \frac{100000}{120}

Next Step Prepare to Evaluate

∴

EM = \frac{100000}{120}

Next Step Evaluate

∴

EM = 833.333333333333

LAST Step Rounding Answer

∴

EM = 833.3333

Equity Multiplier Formula Elements

Variables

Equity Multiplier

The equity multiplier is a financial leverage ratio that measures the amount of a firm's assets that are financed by its shareholders by comparing total assets with total shareholder's equity.

Symbol: EM

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Equity Multiplier

Total Assets

Total Assets are the final amount of all gross investments, cash and equivalents, receivables, and other assets as they are presented on the balance sheet.

Symbol: TA

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Total Assets

Total Shareholders' Equity

Total Shareholders' Equity is equal to a firm's total assets minus its total liabilities and is one of the most common metrics used by analysts to determine the financial health of a company.

Symbol: TSE

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Total Shareholders' Equity

Other formulas in Important Formulas of Financial Ratios category

Go Free Cash Flow

FCF = CFO - CAPEX

Go Free Cash Flow to Firm

FCFF = CFO + (Int \cdot (1 - tax)) - CAPEX

Go Debt to Assets Ratio

DA = \frac{TL}{TA}

Go Debt to Equity Ratio

R D/E = \frac{TL}{TSE} \cdot 100

How to Evaluate Equity Multiplier?

Equity Multiplier evaluator uses Equity Multiplier = Total Assets/Total Shareholders' Equity to evaluate the Equity Multiplier, The Equity Multiplier is a financial leverage ratio that measures the amount of a firm's assets that are financed by its shareholders by comparing total assets with total shareholder's equity. Equity Multiplier is denoted by EM symbol.

How to evaluate Equity Multiplier using this online evaluator? To use this online evaluator for Equity Multiplier, enter Total Assets (TA) & Total Shareholders' Equity (TSE) and hit the calculate button.

FAQs on Equity Multiplier

What is the formula to find Equity Multiplier?

The formula of Equity Multiplier is expressed as Equity Multiplier = Total Assets/Total Shareholders' Equity. Here is an example- 833.3333 = 100000/120.

How to calculate Equity Multiplier?

With Total Assets (TA) & Total Shareholders' Equity (TSE) we can find Equity Multiplier using the formula - Equity Multiplier = Total Assets/Total Shareholders' Equity.

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Equity Multiplier Formula

Equity Multiplier Example

Equity Multiplier Solution

Equity Multiplier Formula Elements

Other formulas in Important Formulas of Financial Ratios category

How to Evaluate Equity Multiplier?

FAQs on Equity Multiplier

Variable Name