Investopedia

Continue to Site »

Equity Multiplier

Filed Under »
Dictionary Says

Definition of '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 Says

Investopedia explains 'Equity Multiplier'

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.

Articles Of Interest

  1.

    Will Corporate Debt Drag Your Stock Down?

    Borrowed funds can mean a leg up for companies, or the boot for investors. Find out how to tell the difference.

  2. Debt Reckoning

    Learn about debt ratios and how to use them to assess a company's financial health. You could save a lot of money!

  3. Ratio Analysis Tutorial

    If you don't know how to evaluate a company's present performance and its possible future performance, you need to learn how to analyze ratios.

  4. Trading Is Timing

    Learn how to make gains even if you don't get in at the right time.

  5. How To Outperform The Market

    Active trading is an investing style that aims to beat the market. Find out how it works, and whether it will work for you.

  6. Reinvesting Capital Gains In Leveraged Portfolios

    Don't get forced into action. Learn how to plan properly to avoid making rash decisions.

  7. Margin

    Find out exactly what margin is and why it's important.

  8. Margin Call

    Find out why a margin call is so important to investors.

  9. Leveraged Buyouts

    LBOs are often presented as predatory by the media. Find out why.

  10. Covered Call Strategies For A Falling Market

    Find out how to come out on top, even when the market is dropping.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Winner's Curse

    Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.

  2. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  3. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  4. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  5. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  6. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.
Trading Center