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the return on equity divided by the return on assets
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What is the 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.
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.
What is the full form of FLM in Forex?
forex lendor market
What are the advantages and disadvantages of a high leverage ratio?
disadvantages of a high leverage ratio in financial crisis
What happens to the credit multiplier when the cash reserve ratio is increased?
The credit multiplier decreases.
What is meant by Earnings multiplier?
P/E Ratio
What is the equity multiplier if a company has a debt equity ratio of 1.40 return assets is 8.7 persent and total equty is 520000?
The equity multiplier = debt to equity +1. Therefore, if the debt to equity ratio is 1.40, the equity multiplier is 2.40.
The debt ratio is a measure of a firms what?
Leverage
If a company has an equity multiplier of 2.4 what is its debt ratio?
1.4
If A firm that has an equity multiplier of 4.0 will have a debt ratio of?
0.75
If the currency drain ratio is 0.38 and desired reserve ratio is 0.002 what is the UK money multiplier?
3.612
How do you solve for debt to equity ratio with an equity multiplier of 2.47?
Equity Multiplier = 2.4 Therefore Equity Ratio = 1/EM Equity Ratio = 1/2.4 = 0.42 MEMORIZE this formula: Debt Ratio + Equity Ratio = 1 Therefor Debt Ratio = 1 - Equity Ratio = 1 - 0.42 = 0.58 or 58%
