equity multiplier

Definition

Total assets divided by common stockholder's equity. This is a measure of leverage. The higher the ratio is, the more the company is relying on debt to finance its asset base.

Use equity multiplier in a sentence

The equity multiplier was really easy to use once you got the hang of it because it just used simple division in its processes,

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Unfortunately after calculating their equity multiplier they realized they had to much debt and consequently had less leverage for future borrowing.

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John's going to be out of a job because Caterpillar has a very low equity multiplier, nobody is needing parts or service, so Caterpillar don't need John.

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