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If a company's return on equity is 10 percent its profit margin is 5 percent and its asset turnover is 1.57 what is it's equity multiplier?
EQUITY MULTIPLIER=Total Assets / Total Stockholders' Equity
What is ROE divided by ROA?
ROE divided by ROA isi the equity multiplier, which is also equal to total assets divided by total equity.
How do you find a multiplier?
For a change of p percent, the multiplier is (1+p/100).
The multiplier of a variable?
The term coefficient is often used to mean multiplier of a variable. So if we have 3x+3, then 3 is the coefficient of x.
What is Financial leverage multiplier?
The leverage multiplier equals to total asset dividing by shareholders' equity. The high leverage multiplier indicates that the firms decide to overcome the high levels of borrowing or debt on which it must pay interest. The higher ratio means higher liability than its shareholders' equity. Essentially, the ratio is mainly used to help firms making decision about how to raise funds by undertaking debts. A company will only undertake significant amounts of debt when it believes that return on assets (ROA) will be higher than the interest on the loan.
