The total assets divided by common equity is a formula uses for calculating _________?
Correct answer: A. equity multiplier
- A. equity multiplier
- B. graphical multiplier
- C. turnover multiplier
- D. stock multiplier
Explanation
The equity multiplier equals total assets divided by common equity and indicates the extent to which assets are financed through shareholders’ equity. It is also a component of the DuPont return-on-equity analysis.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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